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Parity
When two currencies have the same value. Therefore, the exchange rate is 1. |
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Pips
Currency pair quotes are represented by decimal numbers. A Pip is the minimum fraction that represents such currency. For example, in the USD/EUR pair, the rate is of 1.5601. Therefore, a pip is equivalent to 0.0001. For USD/JPY, the rate is 107.08, so pip in this care is equivalent to 0.01. Profits and losses are usually represented in terms of pips. |
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Political Risk
The risk to which trades are exposed according to changes in the political scenario of a country and that may have negative effects. |
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Premium
In the market, this is the amount according to which the forward or futures price exceeds the current price. |
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Principal Value
The original amount invested by an individual |
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Price Transparency
Market rates that are accessible to all market participants, without spread differences, delays, etc. |
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