๐What is a Pip?
The unit of measurement to express the change in value between two currencies is called a โpip.โ
If EUR/USD moves from 1.1050 to 1.1051, that .0001 USD rise in value is ONE PIP.
A pip is usually the last decimal place of a price quote.
Most pairs go out to 4 decimal places, but there are some exceptions like Japanese yen pairs (they go out to two decimal places).
For example, for EUR/USD, it is 0.0001, and for USD/JPY, it is 0.01.
๐What is a Pipette?
There are forex brokers that quote currency pairs beyond the standard โ4 and 2โ decimal places to โ5 and 3โ decimal places.
They are quoting FRACTIONAL PIPS, also called โpointsโ or โpipettesโ which equal a 10th of a pip.
๐How to Calculate Pip Value:
๐The value of pip depends on the following three factors:
โ๏ธThe quoted currency
โ๏ธThe volume of the trade
โ๏ธAnd the exchange rate
Based on these factors the fluctuation of even a single pip can have a significant impact on the value of the open position.
The value of 1 pip is calculated by the following formula:
The value of 1 pip = (Pip in decimal places * Trade Volume)
๐Example:
1 pip volume in EUR/USD is equal to 0.0001
Then 1 PIP VALUE equals:
100,000 EURโ> 100,000*0.0001= 10 USD
10,000 EURโ> 10,000*0.0001= 1 USD
1,000 EURโ> 1,000*0.0001= 0.1 USD
100 EURโ> 100*0.0001= 0.01 USD
โ Tell us about issues you had with pips value calculation/understanding in the beginning of your traderโs journey in the commentsโ
๐And See you next time๐
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โ My Website: www.prosignalsfx.eu/
โ For VIP SIGNALS contact: t.me/prosignalsfx_contact
โ RELIABLE BROKER: www.prosignalsfx.eu/trustedbroker