What Are Forex Market PIP’s?
When new investors first step into the world of forex trading, a question that many of them ask is What Are Forex Market Pips? Simply put, a pip is the smallest measure used for quoting forex prices. As forex currency prices are quoted in fractions, a PIP is the smallest decimal place figure found in the price quotes. What does pip stand for? “Pip” is an acronym which stands for “percentage in point.”
When forex trading at sites such as Finexo, there are generally two groups of currency pairs found. The first group does not include Japanese yen pairs and the prices have four decimal places. For example, if the price of the GBP against the USD was quoted at 1.6308 and the price shifted up to 1.6311 then the price has changed by three pips. Whereas the second group of currency pairs containing the Japanese yen only have two decimal places. An example of this would be if the price of the USD against the JPY dipped from 97.44 to 97.42 that would be a drop of two pips.
Because a pip is a ratio and not a figure it cannot have a dollar value, which can confuse many new forex traders. For example, if you were quoted the price for EUR/USD at 1.4653 this would mean that every Euro is equivalent to 1.4653 US Dollars at that point in time, which as you can see does not refer to the price of a specific currency pair but it compares the price of two currencies giving you a ratio.
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