What does technical/fundamental analysis, spread or PIP mean?

In Forex trading there are very special technical terms. Not every trader can know everything. In addition, in the age of modern technology, such as the Internet, it is quite easy to learn about various technical terms. Nevertheless, the trader should familiarize himself with some very specific terms before trading. One of them is without a doubt the size of the portfolio. The account size provides information about the initial capital with which the future trader can open an account at all. Standard accounts are to be given the preference to the mini accounts in any case. Who is uncertain, should test once the difference with a demo account. Although the stop-loss order is subject to a fee with some brokers, it guarantees that a specific position is actually closed out at the desired price.

Technical analysis or fundamental analysis?

Both are important. Forex traders make decisions with the help of charts and diagrams (technical analysis), but at the same time economic fundamentals (fundamental analysis) play a crucial role. Technical traders use trend lines, charts, resistance and support lines, as well as mathematical analysis and numerous patterns when trading. It is not uncommon to have multiple screens lined up. Despite these numerous hedges and accurate analyses, dramatic price fluctuations and price movements can always occur when unexpected events occur. In most cases, however, it is the anticipation of a particular event, rather than the event itself, that drives the market.

What is behind the term spread?

The difference between the buying and selling price of the two currencies is called the spread. As an example, for example, the euro and the US dollar: If a purchase is made at 1.4300 and a sale is made at 1.4297, the spread is 3 pips.

What is PIP?

If you start trading on the Forex market, you will automatically come across the term Pip. Pip is the abbreviation for percentige in point and it is the fourth digit after the decimal point. All losses and profits are expressed in pips. The term fractional pips is used for the fifth digit after the decimal point. There are only two exceptions in the currency pairs and they are the US Dollar and Japanese Yen and the Euro and Japanese Yen currency pair. For these two main currency pairs, the pip refers to the second digit after the decimal point. The pip always represents the smallest possible change in the rate of the exchange rate. The exchange rate and the associated value of a currency are significantly influenced by various factors. These include political stability, interest rates and also inflation. However, the value of a currency can also be influenced to a large extent by governments and their central banks when they act as sellers or buyers.