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    Thread: What is a pip in forex trading?

    1. #1
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      Default What is a pip in forex trading?

      This is a question on the lips of all Forex Newbies in this business. Let's do justice to this topic by discussing about what a pip is in Forex?


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      yes, let's make justice, a pip in the financial world is an abreviation of percentage in point which is the unit of change in forex, this variation can be valued to 4 decimal places or 2 decimal in case of japanese currency, this percentage in point can be also the unit of the smallest size of change of currencies which is the tick. I like this question.


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      Default What are Pips, Ticks, and Points?

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      ---------- Post added at 05:22 PM ---------- Previous post was at 05:15 PM ----------


      Pips or “points in percentage” allows one to measure the difference in the exchange rate of currencies. The pip value is determined by currency pair, exchange rate, and the size. One pip has the value of .0001, two pips equals .0002, three equals .0003, etc. When trading in a mini lot, each pip is worth one unit of the currency involved. In a micro lot, each pip has a value that is 1/10 of the value of a mini lot. Currency is usually traded in the lot size of 100,000 units of the base currency. A pip is the minimum price change possible. The value of your pips is determined by your lot size. The difference between the bid and ask price is the spread. Profits are made when there are positive pips and losses are suffered when there are negative pips. The spread is the way your broker makes money. Smaller spreads are more desirable because there are smaller changes in exchange rates and higher profits. Stock exchanges measure tick value by how many trades happen every few seconds. The euro futures market has a value of $12.50, $6.25 for the British pound futures market, $5.00 for the Dow Jones Futures market and $12.50 for the S&P Futures market.






      A tick is the minimum movement of a price security in any direction and the smallest amount of time between trades. It is the smallest size a stock or security can move. Tick sizes can be fixed or variable. Highly traded stocks are usually smaller tick sizes. One cent is the minimum tick size for stocks above $1. A tick takes the minimalist time between two trades. Forex traders utilize tick charts with technical analysis. Stock markets usually have a tick size of .01. A tick can also mean the number of buyers and sellers of stocks. Markets with smaller ticks will usually have smaller gains and losses. Popular ticks are futures, stocks and commodities ticks. They use charting software and tick indicators. One popular indicator is the NYSE indicator. It is used in one to five minute charts. NYSE tick indicator uses a divergent trading strategy. A divergent trading strategy can use an upward trend and indicates that the index will increase. Downward trends are sign of weakness in the markets. Divergent trading strategies can be automatically traded. It can also be used with compounding trading strategies to geometrically grow your account. Other trading strategies would be the FCFN trading system, RevT, Reloaded and Forex Time trader. Picking a good trading system is based on your risk tolerance. Highly risky traders should pick a volatile trading strategy. Low risk traders should pick trades that hedge or limit risk.


      Pivot points are support and resistance levels in charts s. Pivot levels can be calculated from the price changes in trading activities from the previous day. You can also use pivot charts to plot one hour and five minute intervals. One pivot point equals yesterday's high plus yesterdays close plus yesterday's low divided by three.


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      What is a pip in forex trading?
      That is usually the smallest unit that we trade in forex. Talking in general on 4 digit brokers it is the 4th number of the price value and on Yen pairs it is the second number. See the picture:


      https://imgur.com/0bcAq2z

      Notice that on the Yen pair the 2'nd digit is the pip and on the other one the 4'th digit is the pip, compare to where the comma is. For reference the Yen pair has the value 106.86 <-- that is where the dot is and on the GBP pair the dot is 4 digits to the left with it's value that is 1.4186. If we where to buy or sell on any of these pairs the price we usually get is on the other side, to figure out what price you get you can add the spread value to the pip value.

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      Thread closed as the contest has ended..


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      Pip is an abbreviation of Price Interest Point, which is a unit of units to measure changes in exchange rates between two currencies.
      For currencies whose values ​​are displayed in four decimal places.
      1 pip = 0.0001.
      For example EUR|USD from the price of 1.1330 rises to 1.1335, meaning there is a 5 pips increase. Whereas for a currency whose value is displayed with two decimal numbers, 1 pip = 0.01.
      For example, USD|JPY from the price of 100.05 drops to 100.01, meaning a decrease of 4 pips. When learning forex, you will find that price quotes are usually written in four decimals, except for pairs associated with Japanese Yen (JPY).

      However, now there are also many brokers who present forex pairs in the form of five decimals (three decimal places for JPY), for example EUR|USD 1.13354 or USD|JPY 100,015. Now, in such a quote, the last digit is not a Pips, but a Fractional Pips or Pipettes. To measure price movements, Fractional Pips cannot be counted as a whole Pip, but only a tenth of a Pip (1 Fractional Pip = 1/10 Pip). So for example if USD|JPY 100,058 drops to 100,014, then it means there is a decrease of 4.4 pips, not down 44 pips.


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      Pips are a scale used to measure or assess changes in the price of pairs of currencies when trading forex.

      Example:
      if pair EUR/USD moves from 1.3500 to 1.4000 then the pips move is 500 pips for brokers with account standard 4 decimal digits but for brokers with account standard 5 decimal digits then the pips move is 5000 pips. Pips serves to measure losses and profits of traders.

      We can often hear 30 pips increase. This can be interpreted as the difference from the pips when you open the transaction until you close the transaction. Suppose you open buy at 1.2500 and after a few hours the price rises to 1.2530 then the transaction value increases by 30 pips, you will get a profit of 30 Pips and vice versa.
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      What is a pip in forex trading?
      A pip is the movement of price from one point to another, for example the currency price for eurusd is 1.1607 and if the price of eurusd moved up to 1.1610 then eurusd has move three pips upwards , thats how pips works, and we should forget that we Forex have ask and bit price, if the current price of eurusd is 1.1607 then the bid price will be 1. 16010.
      the three pips different between the two pairs is called the spread, and spread can veries between the forex pairs, some have spread of 10 and 12 pips, so we need to understand this before making a trade, so as to adjust our risk well.
      The value of pips in the Forex trading market will be determine by the level of our lot size, but its essential to make our lot size minimal so as to avoid loosing big in the market


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      Pips : Is A Concept we always Use it For Measuring The Pairs Movements For A Specific Time For Example If EUR/USD Pair Moved Today From 1.1600 To 1.1700 This Means That It moved 100 Pips Because The Market opened At Price 1.1600 And Closed At Price 1.1700 So To Calculate The Pips In That Day We will Do The Following Close Price - Open Price = 1.1700 - 1.1600 = 100 Pips .

      Pips While Trading : We Can Measure Our profits or Our loses By it Based on Our lot Size So :
      - If we opened Buy Trade On EUR/USD Pair From 1.1600 and The Price moved To 1.1650 This Means That we Got Profits 50 Pips So if our Lot size Was 50 Cent This means That we Earned 50 CENT X 50 PIPS = 25 Dollar .
      - In the same Above Example If The Price Moved From 1.1600 To 1.1550 This Means That we lost 50 Pips So our Total loses in dollar Will be 50 PIPS X 50 CENT = - 25 Dollar loses .


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