The Pip Measurement

A pip is the standardized unit amount of price movement or change in the rate of a currency pair in forex trading. It measures price movement just like weight is measured in gram or kilogram. It is generally used by Forex Traders to reference profit or loss.

Major currency pairs that are displayed to 5 decimal places have 1 pip = 0.00010. Yen-based pairs are displayed to 3 decimal places, 1 pip = 0.010

Example

Take EURUSD for example, when the price is at 1.30258, an increase of price to 1.30268 will equal to 1 pip move. A decrease from 1.30258 to 1.30248 is also 1 pip move downwards. The pip movement count is measured at the 0.00058 decimal mark.

When EURUSD price is at 1.30258, and it moves to 1.30458, that will be +20pips movement and if price drops from 1.30258 to 1.30058 that will be -20 pips price movement.

Take USDJPY for example, when the price is at 110.586, an increase of price to 110.596 will equal to +1 pip change. A decrease from 110.586 to 110.576 is also -1 pip move downwards. The pip movement count is measured at the 0.076 decimal mark.

Pip calculation
Pip calculation
Caution: Forex trading is risky. It is advisable that you acquire enough experience before you start to trade with real money. Do not invest in money that you cannot afford to lose (it is important that you study leverage, lot size, and money management in Forex trading very well before you execute your trade decision).

To trade in the Forex Market you must first sign up with a Forex Broker. However, there are lots of Forex Brokers out there that offer good service to their clients. Such services include tight spread, partnership amongst others. My preferred brokers are 1. Alpari (https://alpari.com/en/?partner_id=1244646) and 2. FXTM (http://forextime.com/?partner_id=4806145). You may sign up through any of the partner links above. You may also send me a mail in case you need me to guide you on how to sign up and start trading (beanfxtrader@gmail.com)

4 Replies to “Price Interest Point (Pip): Price Measurement”

Leave a Reply

Your email address will not be published. Required fields are marked *