WHAT IS PIP ?
- What is pip?
- Standard Price Quote ( Non-Yen )
- Yen Pairs
- Pip Value Calculation
- Not All Are “Cents”
Pip since most major currency pairs are priced to four decimal places then 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.
Therefore 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.
While It stands for “Percentage in Point”.
Standard Price Quotes – Currency Pairs that do not involve the Yen(JPY), have 4 or 5 decimal places
The Yen Price Quote – Currency Pairs involving the Yen(JPY), have 2 or 3 decimal places.
The Standard Price Quote (Non-Yen)
The Standard Price Quotes (Non-Yen, 4 decimal places)
The 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
- 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 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
The Standard Price Quote ( where USD Quote Currency)
- GBP/USD = 1.6413
- Formula Percentage of point = Lot Size(100,000) * Tick Size
- The Percentage of point =100,000 * 0.00001 = 10 $ per pip value.
Standard Price Quote ( where USD Base Currency)
- USD /CAD= 1.1033 Current Price
- The 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.
- The Percentage of point = 100,000 * 0.0001 * 1.3636 / 0.8308 = 16.41 $ per pip value.
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