1 cent change in currency considered a large movement?

I read this line on few websites:

A one cent (or approximately 100 pip) change in the value of a currency is considered a large move.

Does this mean that our retail FX brokers keeps minimum collateral with trading banks and this is a total leverage game?

Now 2009 low is around 1.24 and 2009 high is around 1.51.

So, we had a movement of 2600 pips in this full year..that means we had a movement of 26 cents only !!

Breaking cents in pips (1 cent = 100 pips) and then introducing massive leverage is the true nature forex game..am i right?

Can someone please tell me what type of rates are these? Are these interbank rates in eur.usd?

http://markets.dealbreaker.com/break...l=148%3A946681

If the currency pair ends in USD (ex: EURUSD) then yes, 1 cent = 100 pips since USD is the counter or quote currency. 100 pips is a nice daily move.

Leverage is necessary because making 1 cent or, in most cases, must less, doesn't buy a lot of groceries.

The rates in your link are just rates. It doesn't matter where they came from, they are representative of the market that traded on that particular day.

Thanks buddy. Now i really understood why leverage is important.

As i said, in this whole year, we have seen 25 cents movement (2500 pips) in eur/usd- exporters and importers can absorb that much volatility.

But we cant even buy a cookie with 25 cents...so by introducing high leverage, what a great casino this forex has become !

I think my understanding of leverage is a little different than this. Essentially the markets run on margin or leverage. This is true of the housing market (5% down depending), the stock market (50% down depending) and the forex market (1% down depending). It really is a case of expectations on behalf of the lender (and borrower to some extent). He expects that a 1% loss can be covered by the you and he gets his money back to lend to someone else. In other words he feels secure that his money is safe.

Historically a 1 cent move in a day was signifigant. The events of the past year or so have changed that perception, but apparently not in the minds of those providing the liquidity.

I don't the forex market is a casino - casinos would never give people like us 99% funding! The biggest similarity between the two is that win or lose, the house always gets it take.