đź“ŹPip is a measurement of the price change in a currency pair trading on the forex market. In most cases, pip is the equivalent to 1/100th of 1%. That rule is applicable to all the currency pairs quoted to the 4th decimal place like EURUSD.
➡️Current EURUSD price is 1.1696 6 is the 4th decimal place representing a pip. If the pair moves from 1.1696 to 1.1697, that 0.0001 USD rise in value is ONE PIP.
❌That rule is not applicable, for example, to USDJPY which is only quoted to 2 decimal places.
➡️Current USDJPY price is 109.62 2 is the 2nd decimal place representing a pip. If the pair moves from 109.62 to 109.63, that 0.01 JPY rise in value is ONE PIP.
🦉The word pip stands for "price interest point" or "percentage in point".
Even though a pip might appear as an extremely small unit of measurement, in leverage trading even the one pip price change of the instrument may lead to a sufficient gain or loss.
âž—How to calculate the value of a pip? Each and every currency has its own relative value. In the following example, I will show you how to calculate the value of a pip for a particular currency pair.
USD/CAD = 1.2753
Reading that as 1 USD to 1.2753 CAD or 1 USD / 1.2753 CAD
1 Pip = [(0.0001 CAD) / (1.2753)] * 1 USD = 0.00007841 per unit traded.
Following this example, if we trade 10.000 units of USD/CAD, then a one pip change to the exchange rate would be approximately 0.78 USD change in the position value.
Alternatively, pip value can be calculated with various calculators & apps.
I hope that with these examples and my explanation you will understand the concept of a pip easily.
Let me know what do you want to learn in the next posts!
❤️Please, support this idea with a like!❤️
@VasilyTrader, thanks for your useful posts. I don't know for identifying the support and resistance zone how much to look at the past in the daily and 4h and 1h chart. Could you please talk about that?
VasilyTrader
â‹…
@remarkableSala57219, I will!
thank you so much!
ProSignalsFx
â‹…
Sooo many traders dont understand that! super important thing!
neza24514
â‹…
Thnx for this usefull information. Could you please do something about risk management(Risk/Reward calculations) very important for me as a beginner.