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What is Forex Pip? Pips (also called a point ) is the minimum course movement in Forex. We know that a trader selects a currency pair with trade at the Forex market in which a currency is sold and another is bought, and then the trader earns on the price difference. If the currency value changes, the amount after the change called Pip.
Let’s explain with an excample. we act with an EUR / USD-currency pair, the topical course is 1.3519. We have forecast growth and have opened a purchase position. Our forecast has turned out right, the rate rose and reached 1.3520. Here the price change is up to the fourth place after the decimal point (0,0001), Pip / point called.
How does one calculate the costs of an article?
With Forex transactions it is important, the profit or loss for which the trader is ready to bet, to predict not only in points (Pips), but also to be able, to convert these positions into a monetary recompense. The value of an article depends on the currency pair and the transaction amount. For all currency pairs (except the Japanese yen) Pip 0.0001 amounts. (For the yen the value 0.01 amounts.)
If we return now to our example with the currency pair EUR / USD and calculate the value of 1 point. We already know that trade at the Forex market exists of contracts (plumb line) and amounts to a standard plumb line 100,000 US dollars. Accepted, we deal it with Without standard, and to calculate the costs for Pip, we need the 100,000-fold of the number of the Pips, i.e. from 0.0001, and as a result we think that the value of a point 10$ will be. Here another example of the calculation of the value of 1 Pip is for a lot in ten thousand CHF / USD and the base currency of the account is the US dollar. Begin with 10,000. Multiply 10,000 by 0.0001, because 1/10.000 Pip is for all pairs (with the exception of JPY pairs). 10000 ×.0001 = 1. Now you know that every article 1 costs US dollar. This is evaluated in the “counter currency” (the second currency) of the pair. In this example CHF / USD is used, so that USD is the currency of the pair. Here 1 point costs 1 US dollar for 1–10 000 Loose EUR / USD.