What is a “pip”?

"Pip" is short-hand for "Point in Percentage". It represents 1% of the smallest denomination of the counter currency in a pair. For example, the smallest unit of a US Dollar is 1 cent. A pip is 1/100th of 1 cent. The same holds of most currency pairs. There is no smaller unit than the Yen in Japanese currency, so for JPY pairs, a pip is 1/100th of 1 Yen.

A pip is typically found in the 4th decimal place for an exchange rate. For example, with a EUR/USD price of 1.54281, you would look at the “8”. If the Euro rose to 1.54291, it would have risen by 1 pip.

Rollover Interest

When you hold open positions at 4:00PM, you have technically held them overnight. When holding positions overnight, rollover interest is either added or subtracted from your Currency Account.

Every currency you buy or sell has a certain overnight interest rate associated with it. The interest amount varies based on the interest rate differential between the two currencies you are buying and selling, and fluctuates day to day with the movement of prices. These rollover rates or “swap rates” are based on money market rates. To see each trading day’s rollover rates, look at the Roll columns in the Dealing Rates Tab.

For example, on any given day, the rollover could be $11.00 per lot for GBP/USD and $3.30 per lot for EUR/USD. Rollover fees are shown in dollars per lot and are posted in the "Roll S” and “Roll B” columns of the Dealing Rates. For Participants that do not hold a currency position through 4:00 PM, rollover will not affect their account.

At 4:00 PM, funds are automatically subtracted from, or added to, Currency Accounts with open positions.

Top Menu Bar



The top menu bar of the Currency Trading section of the Site has the following five buttons:
• Sell: Allows you to create an order to sell a Pair at the current market price.
• Buy: Allows you to create an order to buy a Pair at the current market price.
• Entry: Allows you to create an “Entry Order”, which is an order to buy or sell a Pair at a future price.
• Report: Allows you to specify the dates for which you would like to view all account information.
• Refresh: Click here to refresh the information displayed. You will get all the most recent rates and information.

The Overview tab displays the following account information:



• Cash Balance: This is the “floating” value of funds in your Currency Account, including any profits and losses on open positions.
• Day P/L: Day P/L includes the profit and loss for the day’s trading session. This is all profit and loss from open and closed positions incurred since the beginning of the trading day at 4:00 PM.
• Usd Mr (Used Margin): This is the amount of Currency Account equity currently committed to maintain open positions. It is similar to a deposit required to maintain your open position(s). The Currency Account must maintain AT LEAST this amount for open trades to remain open. For every 100k lot (the smallest trade size), you will need to set aside $10,000 of your available funds. For example, with 10% margin (10:1 leverage), if you have $500,000 (5 lots) in open positions, you would have a $50,000 margin requirement. You will see this in the Used Margin Column.
• Usbl Mr (Usable Margin): This is the amount of money that is not currently being committed to Used Margin. Usable Margin should be thought of as 2 things: (1) The amount available to open NEW positions and (2) The amount that you can lose before receiving a margin call. The number fluctuates with profits or losses in your account. Usable Margin plus Used Margin equals Cash Balance.
• Usble Mr, %: The column titled Usable Margin, % shows the usable margin as a percentage of your Currency Account Cash Balance. This enables you to see how much of your current cash is committed to maintaining your open trades.
• MC (Margin Call): In the margin call box, there will be a Y (yes) or N (no). If Y appears, your usable margin has reached zero, you received a margin call, and all your trades were closed.

Margin Calls

The idea of margin trading is that your margin acts as a good faith deposit to secure the larger notional value of your position. Margin trading allows Participants to hold a position much larger than the actual Currency Account value. The Currency Trading portion of the Contest has margin management capabilities, which allow for this high leverage. If your Currency Account falls below margin requirements, it will trigger an order to close all open positions. When positions have been over-leveraged or trading losses are incurred to the point that insufficient Usable Margin exists to maintain current open positions, a margin call will result and open positions must be liquidated.

Please keep in mind that when a Currency Account’s Usable Margin reaches zero, all open positions are immediately closed. The margin call process is entirely electronic and there is no discretion on FXCM’s part as to order in which trades are closed. Since the margin call closes all open positions, your Currency Account can never have a negative balance.

Example: A trader has $100,000 in a standard account and his margin requirement is 10% (i.e. leverage of 10:1). For each position he opens (each position = 1 lot = 1000,000 notional value), he is required to set aside $10,000 in used margin. If he opens two positions, his required margin is $20,000. The trader can lose up to $80,000 before he starts dipping into his margin requirement. When his account equity reaches $20,000, a margin call is triggered and all positions will be closed.



Summary Window

The summary window gives you an overview of your Currency Account’s overall exposure. It shows each currency pair in which your Currency Account currently has open trades, as well as the average entry price and current profit or loss in that pair.

Included in the Summary window from left to right is:

• Currency: The Summary window sorts all open positions by currency pair rather than ticket number. When you have multiple positions open for the same currency pair, the Summary window will add them together.
• S Amt (K) and B Amt (K): This is the cumulative size of all open positions in the currency pair, shown in thousands. Sell (short) positions are shown in S Amt (K) while Buy (long) positions are shown in B Amt (K).
• Av Sell and Av Buy: Shows the average price at which you entered Sell (short) or Buy (long) positions in each currency pair.
• Gross P/L: This is your current floating profit or loss in open positions of each particular pair in US Dollars. A positive number denotes a floating profit; a negative number denotes a floating loss.
• Amt S (K) and Amt B (K): This is the cumulative size of all open positions in the currency pair.
• Sell and Buy: These columns show the current Buy or Sell price, at which you can close your current position(s).

Dealing Rates




Buy and Sell

You can buy or sell any currency pair listed at any time, so long as you have sufficient margin. Each currency quote box contains both a buy (i.e., offer or ask) and a sell price (i.e., the bid). The spread is the difference between the buy and sell price, and this represents your total transaction cost.

When the rate for a currency pair rises, this means that the base currency (the first currency listed) is getting stronger and therefore the counter currency (the second currency listed) is getting weaker. When the rate for a currency pair falls, this means that the base currency is getting weaker and the counter currency is getting stronger.

If you are expecting the rate for a currency pair to rise, you would buy that pair, which gives you a long position. If you expect the rate to fall, you would sell that pair, establishing a short position.

High and Low

Also displayed in the currency quote box is the high and low prices since 4:00PM at the end of the day’s market session. The high shown is the highest Buy price reached since 4:00PM and the low is the lowest sell price reached since 4:00PM.

Roll S and Roll B

This shows your Roll rate for Buy and Sell positions.
• This is the amount in dollars per lot that you will pay or receive, respectively, for positions that are open AT 4:00PM on a trading day.
• If there is a minus sign next to the number, the amount will be subtracted from your Cash Balance. If the number is positive, the amount will be added to your Cash Balance.
• If you have no open positions at 4:00PM, even if you made trades during the previous 24 hours, there will be no rollover of positions, and no Roll S or Roll B will apply.
• For a more detailed description of how rollovers work, please refer to the section entitled “Rollover Interest” above.

Pip Cost

A “pip” is one of the most common ways that price movement, profits, and losses are counted in the currency trading market; much like “points” are used in the stock market. (See “What is a pip” above for more details). The Pip Cost gives you the pip value in US Dollars for each currency in real time. The approximate pip value is $10 per pip.

Time

Every time an exchange rate changes, a time stamp is placed next to the currency pair. The time is recorded in Eastern US Time. The official time for all exchange rates will be determined in accordance with FXCM’s internal clock, maintained at FXCM’s offices.