What is margin and leverage?
When trading forex, you only need a small amount of capital to open and maintain a position. This capital is called margin. For example, if you want to buy EUR/USD with a value of US$100,000, you don't need to pay the full amount, but only a small portion, such as US$2,000. The amount of margin depends on your forex broker or CFD provider. Simply put, margin is the amount of credit you provide to your broker or your ability to hold a trade until it is closed. Leverage is the ratio of the amount of capital used in a trade to the amount of margin.
What is the buy/ sell spread?
Each currency pair has two prices: the buying price and the selling price. The selling price is the price at which you can sell the base currency. The buying price is the price at which you can buy the base currency. The difference between these buying and selling prices is called the spread. Also known as the "buy/sell spread" For example, if you receive a quote of $1.2770/72 for a EUR/USD pair, the former figure is the "buy" price of $1.2770 and the latter figure is the "sell" price of $1.2770. For example, if you receive a quote of $1.2770/72 for a EUR/USD pair, the former figure is the "buy" price of $1.2770, and the latter figure is the "sell" price of $1.2772, the difference between the two is $0.0002, i.e., the buy/ sell spread, which is equivalent to 2 pips.
