what is a pip?

Discussion in 'Forex Trading Discussion' started by pipexch, Sep 27, 2020.

  1. pipexch

    pipexch ECZ Member

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    Pip [singular] | pips [plural], pipettes, points and ticks are basic concepts in forex trading that traders use regularly to describe price changes.

    In the Forex market, traders buy or sell a currency the value of which is expressed in relationship to another currency. The exchange rate rises and falls by pips. Depending on the context, this unit of change is normally one basis point.

    Pip stands for “Percentage In Point”. It is a “point” for calculating profits and losses and represents the smallest incremental move an exchange rate can make. Most major currency pairs[1] are priced to four decimal places. So, the smallest change is that of the last decimal point: 0.001.

    For example, if the EUR/USD pair moves from 1.1903 to 1.1904, that is a one-pip movement.
     
  2. PinkSugar

    PinkSugar ECZ Member

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    A pip measures the amount of change in the exchange rate for a currency pair, and is calculated using last decimal point. Since most major currency pairs are priced to 4 decimal places, the smallest change is that of the last decimal point which is equivalent to 1/100 of 1%, or one basis point.
     
  3. Freetgirl

    Freetgirl ECZ Member

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    Percentage points refer to an increase or decrease of a percentage rather than an increase or decrease of a raw number.
     
  4. rere_redrigo19

    rere_redrigo19 ECZ Newbie

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    What range should I take for SL and TP so that money management remains good?