In previous educational articles, we have looked at pips and explained what they are, how to read currency pairs and the different types of ‘lots’. Now we are going to see how to calculate the monetary value of a pip. As a reminder, a pip is the measure of the change...

Leverage in forex is a “loan” that the broker gives to the trader so that the trader has more capital to trade with than what he or she initially deposited. Leverage is expressed in the form of a ratio and it depends on the client's knowledge and experience. Pure...

Since we have covered Leverage and how Leverage works in Forex, let's take a look at Margin. Margin is the amount of funds that the broker requires from the trader as collateral, in order to open a specific position of volume based on the leverage that the client has...

Balance in forex refers to the amount of money you have in your trading account. It is very important to remember that your balance does not include any profits or losses you might have from any open positions. If you have open positions, your balance might change...

Now that we have already covered Balance, it is vital to understand what Equity is. In trading, equity refers to the amount of money a trader has in their trading account (the Balance) plus or minus any profit or loss from open positions. Many traders confuse these...

Free Margin in forex trading in its simplest definition, is the money in your trading account that is available for trading. It is calculated by using the formula: Free Margin = Equity - Margin (of open positions). Let's look at a relevant example. A trader enters a...

Margin Call is a notification which alerts you that you need to deposit more money in your trading account, or close losing positions, to free up margin. Margin Call is denoted as a fixed percentage, determined by the broker. You can find the Margin Call percentage in...

Since we have already covered Free Margin and Margin Call, it is now time to look at Stop Out. In forex trading, Stop Out is the level at which the broker starts closing automatically (“liquidating”) all of his least-profitable open positions in the foreign exchange...