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A pip, short for ‘point in percentage’, is a very small measure of change in the value of a currency pair on the foreign exchange (forex) online market. It can be measured in terms of the quote or the underlying currency. It is a standardised unit for the smallest amount by which a currency quote can change, which is usually $0.0001 for USD-related currency pairs. A fractional pip or point is equivalent to 1/10 of a pip and there are 10 points to every 1 pip.

When trading forex, spreads with low pips (0.0 pip spreads) indicate that a product is traded very frequently but pips can also be used for risk management tools like Stop Loss orders.

Knowing your currency pair’s pip value allows you to manage your risk exposure, and potentially make the same profit across pairs. For example, if your Stop Loss equals 50 pips, the Take Profit could be 100-150 pips - as many think that having a SL/TP ratio of 1:2 or 1:3 is a good benchmark.

CFD trading, or "Contract for Differences" trading, allows you to open positions on the price performance of an asset without owning the asset directly. This means you have the flexibility to choose whether you think something's value will go up or down.

However, pure forex trading involves physically exchanging a currency pair for the value of another currency.

At Equiti, we offer FX CFD trading, which enables you to speculate on the price of a currency pair without directly owning it.

We offer leverage through the use of margins, where we provide borrowed funds from our deep liquidity pool to increase your trading position. This means traders can increase their market exposure by paying a fraction of their initial investment (their deposit).

In practice, 1:20 leverage means you can invest $10 and trade with $200 - allowing for higher potential gains AND losses. Make sure you understand your risk appetite. Try to minimise your losses by using Stop Loss tools or other risk management strategies - or experiment with leverage on our risk-free demo if you haven’t traded with it before.

We offer up to 1:2000 leverage on selected products including precious metals, gold, oil & natural gas commodity CFDs. You can set your leverage limits on each individual trade from our live client portal.

Arguably the most popular tool for reducing risk, stop loss orders are designed to limit loss on a security position that’s made an unfavourable move. When you place a stop loss order with a broker, you’re requesting to close the position once the instrument reaches a certain price. This is helpful as it means your trades need less monitoring and can help to limit losses, particularly in volatile markets.

Please also note that a stop loss is by no means a guarantee, positions may be affected by price gaps over market closures, data release or other economic factors.