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Pip in Forex Trading Market

What is Pip ?

What we will study in this post

  • What is pip ?
  • Standard Price Quote ( Non Yen )
  • Yen Pairs
  • Pip Value Calculation
  • Not All Are “Cents”

What is pip ? since most major currency pairs are priced to four decimal places, the smallest change is that of the last decimal point – for most pairs this is the equivalent of 1/100 of one percent, or one basis point.

the smallest move the USD/CHF currency pair can make is $0.0001, or one basis point. The smallest move in a currency does not always need to be equal to one basis point, but this is generally the case with most currency pairs.

It is stand for “Percentage in  Point”

Standard Price Quotes – Currency Pairs that do not involve the Yen(JPY), have 4 or 5 decimal places

Yen Price Quote – Currency Pairs involving the Yen(JPY), have 2 or 3 decimal places

Pip in Forex

Standard Price Quote (Non Yen)

Standard Price Quotes (Non Yen, 4 decimal places)

GBP/USD = 1.6411

Standard Price Quotes (Non Yen, 5 decimal places)

GBP/USD = 1.63842

  • When we look at currency Quote (Price), we see
  • Cents.
  • Percentage of a cent
  • 1 tenth of a Percent.

Standard Price Quote (Non Yen)

In the Price of 1 GBP= 1.63 84 2

  • 1 = the Dollar
  • 63 = the Cents
  • 84 = the percentage of a cent
  • 2 = the tenth of a Percent

Yen Pairs

  • Yen Price Quote   ( 2 decimal places)
  • USD/JPY = 102.33
  • Yen Price Quote   ( 3 decimal places)
  • USD/JPY = 102.334
  • In the Price = 102.334
  • 102 = the Yen
  • 33 = the percentage of a Yen
  • 4 = the tenth of a Percent

 

PIP Value Calculation

Standard Price Quote ( where  USD Quote Currency)

  • GBP/USD = 1.6413
  • Formula  Percentage of point =  Lot Size(100,000)  *  Tick Size
  • Percentage of point =100,000 * 0.00001 = 10 $ per pip value.

Standard Price Quote ( where  USD Base  Currency)

  • USD /CAD= 1.1033  Current Price
  • Formula  PIP =  Lot Size(100,000)  *  Tick Size  /  Current Price
  • Percentage of point = 100,000 * 0.0001 / 1.1033 = 9.06 $ per pip value.

Standard Price Quote ( where  USD not involve)

  • EUR/GBP= 0.8308 *** Base Quote EUR/USD = 1.3636
  • Formula  PIP =  Lot Size(100,000)  *  (Tick Size) * (Base Quote ) / Current Price
  • Percentage of point = 100,000 * 0.0001 * 1.3636 / 0.8308 = 16.41  $ per pip value.

About Muhammad Shahid Memon

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