What is a pip in forex
A PIP in forex is a unit of measure to show the change in VALUE between two currencies.
Let’s say you are looking at your trading screen at the EUR/USD currency pairs and you see the price is at 1.2500.
Then it flicks up to 1.2501. That is a one pip movement.
Note there are four digits after the decimal point. Most currency pairs are like this and trade in pip movements.
Why do you need to know this what is a LOT size in forex?
Well, you need to know what you’re doing so you know how to make money from your forex trading.
Let’s calculate the PIP value of a MINI lot
Take a MINI lot of 10,000 and multiply that by .0001
Remember the fourth digit from earlier?
So 10,000 multiplied by .0001 = 1 in this case we now know that the value of 1 pip in a mini lot is one unit of the QUOTE currency.
You probably guessed that if we did this with a Standard lot size of 100,000 the pip value would be 10 units and likewise a Micro lot would be 0.10 units.
This is great news because you can start really small in this business and build up as you learn how to trade.
How to calculate the PIP value in the base currency?
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Have a Great day.