Forex PIP – An Overview

Forex PIP – An Overview

Forex PIP is the abbreviation of Percentage In Point. The smallest unit of the percentage increase or decrease in the price of a currency pair is known as pips. The last decimal point in the exchange value of the currency pair is signified as pip. FX PIP provides an easy way to calculate profit and loss.  Higher pip rate means better profits.

In order to become successful in Forex trading, it is crucial to have a solid understanding of pips. It is important for every new trader to figure out the value of pip for any currency pair.  Watching fluctuations of pips is the key to make profit on Forex trading.

Pips are the Forex market version of basic points. Basic points in Forex trading are the small change measured in Forex trading and is equal to one one-hundredth of one percent. For example, if the exchange rate of EUR/USD pair move from 1.4465 to 1.4468, then it is calculated as 3 pips. The profit or loss depends on the currency on which you are trading.

A Forex trading is done on currency pairs. It is the relationship between two currencies. The currency exchange rate is expressed in measures of ten-thousandth of a unit  and this one thousandth is called a pip.

Forex Pip has different values across different currency pairs and across different prices. The number of decimal places quoted depends on the broker. Pip value depends on the leverage used, trading size and the actual rate of the pair for which the trader wants to calculate the pip value.

Since pip value changes as the price of the currency pair being traded fluctuates, using pipe calculator comes in handy to calculate the values of pip with great speed, ease and convenience. Without any hassle, traders can calculate the sizes of pips in each trade accurately and quickly.

Forex is the most volatile financial market in the world and even a single wrong move could result in huge loss.  It is very important to have the right type of analysis methods in order to make money from Forex trading. Forex pip alerts help the trader to be acquainted with Forex trend.

In order to identify the trends and changes in a Forex market quickly, the Forex Smart Pips trading system is a handy tool. The modules provide comprehensive trading strategies that will make the trader to learn the curve more quickly and easily.

Kenneth Smith

Kenneth Smith lives in Adelaide, Australia and is full time trader. Kenneth offers you his many trading tips in his articles. All the information presented in his posts are based on extensive experience gleaned from years of working with many trading platforms.