Forex Traders - Assisting In Expand Your Success
By Jeffrey Wolf
Although the role of the Forex broker is relatively redundant as a product of technological advancement and amplified awareness, we cannot completely underestimate his role. The new paradigm shift has had something of a democratizing effect on the financial market, and in the years that have followed a glut of banks and brokerages have extended the range of their services to a new market by packaging up their online trading systems for the retail market, enabling the more modest investor to trade from their own computer screen - even on the previously out-of-reach currency markets. This is where the actual role of Forex broker starts.
PIP is nothing special but Price Interest Points. In the forex market, currencies are always priced in pairs. The quoted price is the level where we, acting as the market maker, are willing to buy/sell the currency pair. In the wholesale market, currencies are quoted out to four decimal places, with the last placeholder called a point or a pip. A pip in most currencies is one /10,000th of an trade toll (in USD/JPY, it is one /100th, likewise you can find for others).
Let's see some more information about Spread. As with all financial products, forex quotes include terms like 'bid' and 'ask"'. The 'bid', in its simplest terms is the price at which a broker is willing to buy (and clients can sell) the base currency in exchange for the counter currency. The 'ask' is the price at which dealer will sell (and clients can buy) the base currency in exchange for the counter currency. The difference between the bid and the ask price is referred to as the spread. The spread defines the trader's cost, which can be recovered with a favorable currency move in the market. The value of a pip is determined by the pair of currencies being traded, the toll at which the currency pair is trading and the extent of the position being traded.
There are great Forex brokers, like COESfx, who maintains tight, competitive spreads in the four major currencies against the Dollar, and a total of 17 currency pairs including USD/CAD and AUD/USD.
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