Key Terms for Foreign Exchange Transactions
- 9월 06, 2017
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Key Terms for Foreign Exchange Transactions
pip (point)
In the international foreign exchange market, the unit in which the exchange rate changes is referred to as pip point.
The value of 1pip for each currency depends on whether the USD is in the base currency (USD / JPY, USD / CHF) or the comparative currency (EUR / USD, GBP / USD).
Transaction unit
A typical base unit of transaction is 100,000 units.
That is, the base currency is 100,000 units is 1 contract.
Call unit
In foreign exchange transactions, the call unit is called pip.
The unit of 1pip depends on the base currency or the comparison currency.
Rollover interest (Swap)
This is the amount paid or interest charged at the end of each trading day.
At margin trading, you will be paid interest for a short position while paying interest for a short position.
The difference in net interest rates is known as carry, and traders who want to benefit from this are called carry traders.
You will only be paid when you have an open interest based on the settlement time (SummerTime not in effect / AM 07:00 in Korea time) for the amount you borrowed, which is referred to as a swap.
The bank will calculate the base time for the settlement at 5:00 pm in New York, 7:00 am Korea time.
As a result, if you hold a position before 7:00 am, please be aware that interest will be charged on your position.
Interest will be paid in interest for one trading unit.
Spread
The spread is the difference between the buy / sell price and the buy and sell prices in the foreign exchange market are announced to the foreign exchange dealers.
The bid price in the customer market is reported as bid => bid price, ask => buy bid price.
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