Leverage
Leverage, which represents a margin trading ratio, enables traders to borrow a certain amount of money that allows them to trade in much bigger deals. Moreover, leverage allows one to trade using more money than they have in their account. Therefore, you “leverage” your ac-count’s balance to place a bigger trade. Currency rates move very slowly. This makes small trades unfashionable as they only return small profits and losses for every pip rate changes. Therefore, leveraging helps one to trade in larger deals hence amplifying their potential profits and2 losses.
Pip
Price Interest Point represents the smallest change in a currency pair. Typically, it is the fourth decimal point, although many brokers quote using the fifth decimal. However, the fifth decimal doesn't really affect the price as it changes really quick.
Currency pairs that include the U.S. dollar, a pip is 1/10, 000 of a dollar, whereas when the currency pair includes the yen, a pip is 1/100 of a yen because the yen is closer in value to 1/1003 of other major currencies.
Spread
In Forex trading, brokers quote the bid and ask price for the currency pairs. The bid is the price that a trader can sell the base currency while the ask is the price they can buy the base curren-cy. Spread refers to the difference between the two prices. Besides, this is how the “no com-mission” brokers- those who do not charge a separate fee on traders’ transaction- make their money.
The spread is measured in pips. Most currency pairs- the base currency and quote curren-cy- have a pip value equal to 0.0001. For instance, take the following quote; EUR/USD = 1.1051/1.1053 the spread is 0.0002, which equates to 2 pips.