June 24, 2017

What are forex pips?

Pips stands for ‘Percentage in Point’ which is the smallest price increment in forex trading. It can also be referred to as a ‘point’. In forex trading prices are quoted up to fourth decimal points for currency pairs with an exception of Japanese Yen for which it is quoted up to second decimal point only. That is why for Japanese Yen a pip is equal to 0.01 or 1 cent while for rest of currencies it is equal to 0.0001 or 1 cent. Though such value seems to be really low but currencies are mostly traded in standard lots where pip is equal to $10. Moreover for mini lots pip value is equal to $1 and for micro lots it is equal to $0.10 only. For a currency move from 1.4511 to 1.4514, the pip value will be 3.