Pip stands for "percentage in point." Sometimes, people also refer to pips as "points." Basically, a pip is the smallest price unit for a currency. It is the last decimal point in every exchange rate or currency pair.
For most currencies, this means a pip is 0.0001. Therefore, if you bought USD/CHF 1.2475 and sold at 1.2489, you made 14 pips.
However, there are exceptions. One is USD/JPY. This currency pair only has two decimal places so that a pip is equal to 0.01.
Pips are very important because they are the basis by which a profit or loss is calculated.
What is a Pip Value?
Even when you utilize different currency pairs and deal with fluctuating prices, the pip usually remains the same. If the USD is the base currency, you divide the pip (which is usually 0.0001) by the exchange rate. If the USD is the quote currency, the pip value is always just one pip, such as 0.0001.
Therefore, if the exchange rate for USD.CHF is 1.2489, it goes like so:
0.0001 / 1.2489 = 0.0000800704
That probably seems like a small number, but remember that with forex trading, you can leverage small sums of money to move large amounts of currency. Therefore, it is entirely possible to make a profit off of such a small number.
For example, if your broker lets you trade with leverage of 100:1, you only need to put up $1000 to buy a standard lot of $100,000. You can see that trading in larger lots boosts the pip value so that your profit or loss is also affected, like so:
If you trade on $1000 in currency, your pip value is calculated thusly:
0.0000800704 X 1000 = $0.08 per pip.
This means that you have a profit of $112.14; not bad
you are encouraged to contact the dealing room by phone in these situations:
Whenever the trader asks for trading support, our team checks if the trader has performed the trading factually in order to facilitate the trading process and make it faster. Please pay attention to the following instructions before calling the trader support in the trading call center.
For most currencies, this means a pip is 0.0001. Therefore, if you bought USD/CHF 1.2475 and sold at 1.2489, you made 14 pips.
However, there are exceptions. One is USD/JPY. This currency pair only has two decimal places so that a pip is equal to 0.01.
Pips are very important because they are the basis by which a profit or loss is calculated.
What is a Pip Value?
Even when you utilize different currency pairs and deal with fluctuating prices, the pip usually remains the same. If the USD is the base currency, you divide the pip (which is usually 0.0001) by the exchange rate. If the USD is the quote currency, the pip value is always just one pip, such as 0.0001.
Therefore, if the exchange rate for USD.CHF is 1.2489, it goes like so:
0.0001 / 1.2489 = 0.0000800704
That probably seems like a small number, but remember that with forex trading, you can leverage small sums of money to move large amounts of currency. Therefore, it is entirely possible to make a profit off of such a small number.
For example, if your broker lets you trade with leverage of 100:1, you only need to put up $1000 to buy a standard lot of $100,000. You can see that trading in larger lots boosts the pip value so that your profit or loss is also affected, like so:
If you trade on $1000 in currency, your pip value is calculated thusly:
0.0000800704 X 1000 = $0.08 per pip.
This means that you have a profit of $112.14; not bad
you are encouraged to contact the dealing room by phone in these situations:
- If you are not able to access the internet.
- Failing to receive a confirmation on an online order.
- Failing to connect to ForexGen server.
Whenever the trader asks for trading support, our team checks if the trader has performed the trading factually in order to facilitate the trading process and make it faster. Please pay attention to the following instructions before calling the trader support in the trading call center.
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