Understanding Forex Pips
In Forex trading, a Pip or Percentage In Point or Price Interest Point, is the smallest change in price of a given exchange rate. New traders to the market should have a thorough understanding of the concept as they will encounter this term all the time when doing currency trading.
Since transactions in Forex involve very large sums of currency and Forex spreads are usually very small, currency pairs are quoted to the fourth decimal place to be accurate. This is what is known as a Pip, or the smallest change of a currency pair. Take for example the currency pair of USD/EUR, quoted at 1.2345 and changes to 1.2346, the change in Pip would be 1. And if it changes from 1.2345 to 1.2305, the corresponding Pip change would be 40 Pips. Presently, there are 6 widely-traded currency pairs or called the majors, which are the following:
* EUR/USD, also called the 'EURO" * GBP/USD, also called the "CABLE" * USD/CHF, also called the "SWISSIE" * USD/JPY, also called the "NINJA" * USD/CAD, also called the "LOONIE", or "BEAVER" * AUD/USD, also called the "AUSSIE"
The EUR/USD is the most traded major by an average of 100 Pips a day.
Also, profits and losses are measured in Pips, with the exception of the USD/JPY, since it is quoted at the second decimal place due to having a cent or of a hundredth in some major currencies. The yen's Pip value is .01, while other majors are placed at .0001.
If the price quote for the currency pair of USD/JPY is placed at 110.95, and changes to 111.0, then it has gained 5 Pips. In other currency pairs, such as the USD/CAD, a quote of 1.0234 moves to 1.0224, then it lost 10 Pips. A USD/JPY quote of 77.48 changed to 77.53, the Pip would be at 5 Pips increase. Trading with the AUD/USD with an exchange quote of 1.9876, the Pip equivalent is .0001.
Basically, when you hear someone say, "30 Pips", it denotes thirty units of value in trading. Individual currencies are not similarly quoted in terms of Pips, so it's best to review all the currencies you encounter during your trading. Dealing with large sums might seem daunting at times, but will get easier gradually as you begin to get acquainted with Forex trading as time passes.
Many other currencies besides the Yen have a four decimal place - those mainly paired with the USD at .0001. If you just keep in mind that a Forex Pip is one unit of the furthest listed decimal place, and that each currency pair is assigned a different value, then you'll be well on your way to becoming a future, successful trader. - 23305
Since transactions in Forex involve very large sums of currency and Forex spreads are usually very small, currency pairs are quoted to the fourth decimal place to be accurate. This is what is known as a Pip, or the smallest change of a currency pair. Take for example the currency pair of USD/EUR, quoted at 1.2345 and changes to 1.2346, the change in Pip would be 1. And if it changes from 1.2345 to 1.2305, the corresponding Pip change would be 40 Pips. Presently, there are 6 widely-traded currency pairs or called the majors, which are the following:
* EUR/USD, also called the 'EURO" * GBP/USD, also called the "CABLE" * USD/CHF, also called the "SWISSIE" * USD/JPY, also called the "NINJA" * USD/CAD, also called the "LOONIE", or "BEAVER" * AUD/USD, also called the "AUSSIE"
The EUR/USD is the most traded major by an average of 100 Pips a day.
Also, profits and losses are measured in Pips, with the exception of the USD/JPY, since it is quoted at the second decimal place due to having a cent or of a hundredth in some major currencies. The yen's Pip value is .01, while other majors are placed at .0001.
If the price quote for the currency pair of USD/JPY is placed at 110.95, and changes to 111.0, then it has gained 5 Pips. In other currency pairs, such as the USD/CAD, a quote of 1.0234 moves to 1.0224, then it lost 10 Pips. A USD/JPY quote of 77.48 changed to 77.53, the Pip would be at 5 Pips increase. Trading with the AUD/USD with an exchange quote of 1.9876, the Pip equivalent is .0001.
Basically, when you hear someone say, "30 Pips", it denotes thirty units of value in trading. Individual currencies are not similarly quoted in terms of Pips, so it's best to review all the currencies you encounter during your trading. Dealing with large sums might seem daunting at times, but will get easier gradually as you begin to get acquainted with Forex trading as time passes.
Many other currencies besides the Yen have a four decimal place - those mainly paired with the USD at .0001. If you just keep in mind that a Forex Pip is one unit of the furthest listed decimal place, and that each currency pair is assigned a different value, then you'll be well on your way to becoming a future, successful trader. - 23305
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Managed forex pro starts with a desire to learn and a drive to become a great trader. Learning mini forex trading platform takes dedication and a good teacher. But once you learn how to trade and do so successfully your life will change and you have options and financial resources you never had before.
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4:21 AM
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