Skills and XPs
XPsXPs (or eXperience Points) are points you gain when achieving specific tasks like taking out enemy ships and such. Now, this experience you gain can be used to improve your skills. To that end, the Skill screen can be used to "invest" your XPs into the skills you want to improve.
SkillsThere are several skills (or abilities) you can choose to improve. Depending on your character type, you start with different basic skills. For instance, Merchants begin with a higher Trade level than other players.
Each skill has 10 levels. 0 meaning you have no skill, 10 meaning you've fully mastered that skill. To improve a skill (to raise a skill to a higher level), you spend XPs in that level. The costs are relatively low for the first levels but rises quickly afterward making it harder each time you gain a level.