Understanding the Forex Pip

By: Anne Durrell

If you happen to be from New York you might wonder why they use the word Pip. It means quite a different thing in New York slang than it does in Forex Trading. So you might be wondering what exactly is a Forex pip? We are going to take a few moments here and demystify that for you right here and now.

A Forex pip is an acronym for Percentage In Point, which in the world of trading Forex is simply the smallest price increment unit that can be traded.

For those of you that are schooled or at least semi skilled in Forex you know that the trades are generally calculated and prices quoted in the Forex markets to the fourth decimal point. To give you an example of the Forex pip, when trading in Euros against the United States Dollar it may look something like it will be bidding at 1.1901 and be being offered at 1.1904. If you look at this example you will notice that the Forex pip spread here is 3 Pips wide. One exception to this is the Japanese Yen, which is only quoted to the second decimal point

------------------------------------------------------------------------------

Buy Money FOREX ROBOT Now. CLICK!
------------------------------------------------------------------------------

The Forex pip has a lot of generalities that should be kept in mind, for those of you somewhat new to Forex; I will outline the values here for your reference.

You can figure out the value when it comes to the Forex pip the value can be either fixed or variable. This will be totally dependant on the particular currency pair that you are looking at. Such as when you are looking t the PIP value when it is being used in the United States Dollar against the Euro, the value that you are looking at for a standard lot is going to be $10.00. If you are looking into a mini lot, the value will be $1.00. And further more if you are going into the value of a micro lot, you are looking at a value of $0.10

To some of you reading this that are not well versed yet in the Forex pip, we need to explain for purposes of clarification, what lots consist of. A standard lot is equal to 100,000 units. If you are talking about the micro lot with regards to the Forex pip, we are looking at 10,000 units. And finally when we talk about the micro, this -depending on the dealer, can drop down to as few as 1 single unit.

Now that you know the explanation behind the Forex pip, you will be better able to at least grasp what is being said as you go about trying to decide which, if any method of trading might be best for you as you begin your foray into the world of Forex trading.

The Forex pip can mean the difference between a huge killing and just making a trade.

Other post you may be interested in reading: online trading uk and how to trade stock

Forex Pip

forex pips

Understanding the Forex Pip

Buy Money FOREX ROBOT Now. CLICK!

Related Articles: