Forex pips explained? Probably when you trade in forex online exchange market you must know about what is a pip and a pipet and how to calculate them here we are going to do a little math practice and we are going to explain everything for you and don’t even think about trading until you don’t know about pips and calculating profit and loss here we go with a very informative article about what are pips in Forex trading
What are pips in Forex trading?
The unite of measurement and change in the value of to currencies call a “pip”
If AUD/USD goes from 0.7314 to 0.7315 the unit 0.0001 is the value of ONE PIP
A Pip is usually the last decimal place of a phrase
Almost every currency has 4 decimal places. but some currencies like Japanese Yen go with 2 decimal places.
Like I said before every currency has 4 decimal places but some currencies like Japanese Yen has 2 decimal places here you can see in an example down.
What is pipette?
Usually, brokers give currencies 4 and 2 decimal places but there are brokers who give currencies 5 and 3 decimal places.
The digit after a pip is called pipette for instance if AUD/USD moves from 0.73141 to 0.73142 the unit 0.00001 is the value of ONE PIPPETE
And like that, the Japanese Yen pipette example would be
How to calculate the value of a pip
After understanding pip and pipette now you should understand how to calculate their value.
In the first few examples, we will calculate 4 decimal places currencies.
- You enter NZD/USD at 1.09892 and exit at 1.16971 how many pips you are earned?
1.09892-1.16971 = 0.07081
0.07081/0.0001 = 708.1 pips
here 708 is the value of pip and point 1 (.1) is the pipette.
- You enter at 95.343 and exit at 95.445 how many pips you have earned?
95.343-95.445 = 0.102
0.102/0.01 = 10.2 pips
Because it is a 2 digit pip number you divide by 0.01
- Entry point at 136.060 exits at 144.549
1.36.060-144.549 = 8.489
You can calculate pips online as well visit OnlinepipCalculator to calculate your pips online
Forex pips explained, Hope you have learned what are pips in Forex trading? and how to calculate pips? for more updates about Forex visit our website Techzeer.