Price Changing Pips & points
What is PIP?
PIP is a (point in percentage) it is the smallest whole unit price move that an exchange rate can make. A pip is the fourth digit after the decimal point for almost all the pairs.
Key takeaway to remember a pip is one hundredth of one percent (1/100 x .01) and appears in the fourth decimal place (0.0001)
The bid – ask spread is of forex quote is measured in pips.
What is a point ?
A point represents a fraction of a pip nowadays most of the brokers quote each pair to an extra digit after the pip.
10 points = 1 pip
The very last digit of a currency quote is a point making price quotes much more accurate allowing for fractional spreads and trade calculations.
Calculating Pip Value
The value of each pip is decided by the currency pair and trade size you place.
This is important due to the fact that your profit and loss is calculated by multiplying the number of pips that the price went in your direction or against you by the specific pip value.To make it easier for you to calculate the pip value for FX.Pip in decimal places X Trade size in units = Pip value in ‘term’ currency
Pip in decimal places X Trade size in units / exchange rate = Pip value in ‘base’ currency