Well, Pip is a very important subject in forex trading. In the Forex market, every single change or movement after the decimal point of a currency pair is called a pip. Pips are the plural of pip, for example, the Market has changed 120 pips today. Many people call Pips a point. However, pips are widely used internationally.
Most people spend a lot of time figuring out what pips are. Let’s see if we can make it easier to learn with some examples.
Example 1:
You have opened your terminal (trading software provided by your broker). You see, EUR/USD was 1.4340 and now it is 1.4345.
How many pips have changed?
Rules for extraction: more-less= 1.4345–1.14340= 0.0005
As I said before, counting pips start from number four after the decimal. Forget decimals, let’s do simple calculations
4345–4340= 5
That is, the market has changed by 5 pips.
Then say,
Example 2:
GBP/USD went from 1.5630 to 1.5639. how many pips did the market move?
5639–5630= 9 pips.
Some more:
Market movement (EUR/USD)
Before it was 1.3450, now it is 1.3432= 3450–3432= 18 pips market movement
Earlier it was 1.3450, now it is 1.3550= 3550–3450= 100 pips market movement
Before it was 1.3750, now it is 1.3432= 3650–3432= 316 pips market movement
Earlier it was 1.4450, now it is 1.3450= 4450–3450= 1000 pips market movement
I hope you understand, how pips really work. Also, You have to know many things about forex like deposit bonus, scalping, candlestick, and many more.
Best of luck!
Read more: FP Markets review.