Trading dictionary2 results
Trading terms
Look up market language before opening a lesson or reviewing a chart.
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2 terms
Basics
Pip
A pip is the standard unit traders use to measure small price movement in many forex pairs. In most non-JPY pairs, one pip is 0.0001; in many JPY pairs, one pip is 0.01. It helps compare movement, stop distance, and profit or loss without only reading raw price decimals.
Example: If EUR/USD moves from 1.1000 to 1.1001, price moved 1 pip. If a demo trade has an entry at 1.1000 and a stop at 1.0980, the stop distance is 20 pips. The learner should then connect that pip distance to position size, because 20 pips can be small or dangerous depending on the lot size.Basics
Spread
Spread is the gap between the price a trader can buy at and the price a trader can sell at. It is one of the first trading costs a beginner sees. Wider spread means the trade starts further behind, and it can affect entries, exits, stop placement, and short-term strategies.
Example: If EUR/USD shows a bid of 1.1000 and an ask of 1.1002, the spread is 2 pips. A buy order starts from the ask price, so price must move enough to cover that 2-pip cost before the trade is actually ahead. During news or low-liquidity hours, spread can widen and make a clean setup less attractive.