What are PIPs in Forex Trading?

What are PIPs in Forex Trading?

Price Interest Points or PIPs are vital for day trading. A PIP represents the smallest fluctuation of price of a particular currency. In order to make profit in Forex trading, watching the fluctuations of Forex PIPs is essential.PIP represents the smallest increment value change in any currency pair. For example, in EUR/USD, a value change from 1.0066 to 1.0067 is interpreted as .0001, PIP.

Depending on leverage used, trading size and the actual rate of the pair, PIP value is calculated. Using Forex PIP value calculators, you can calculate the single PIP value for major currency pairs. They are simple and easy to use.

Fx PIP is a measure of the change in currency prices. Understanding Forex PIP is crucial to get into Forex trading. There are two kinds of Fx PIP. They are static PIP value and variable PIP value. In Static PIP value, quote currency is other than US dollar and the value is constant related to US Dollar. In variable PIP value, US dollar is the quote currency. The PIP is calculated by the base or quote currency i.e. second one in the pair.

It is obvious that Forex trading is not an exact science and you cannot win every time. Some of your trade will win and some will lose you money. In order to boost your win ratio, you should be acquainted with all the eight countries’ currency trading market.

The eight currencies most traded are US Dollar, Euro, Swiss Franc, Japanese Yen, Australian Dollar, British Pound, Canadian Dollar and New Zealand Dollar. You should be familiar with the interest rates and their trends. to make money, you have to figure out which currency will have higher interest rates.

Countries with surplus fund have high interest and economically weak countries tend to lower interest rates. Forex is simultaneous buying of one currency and selling of another. You earn money by the difference in interest rates of the pair.

Forex PIP alert online system explains the fundamentals of Forex. It also teaches how to take advantage of PIP and gain profit in Forex trading.

Forex PIP is somewhat like the minimum stock investment that is allowed to make in a stock market. You can try more currencies when you keep your investment limited. If you are more sure of your choice, you can buy more in the better performing ones and liquidate the lesser performing ones.

What’s a Pip? | Forex Trading (YouTube Video)

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.