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March 26, 2018

Question:What is "Pip"? and What does "Pip" stand for in Forex trading?

Answer:

A “Pip” stands for “Percentage In Point“, and is the smallest price change that a given exchange rate can make.

An increase or decrease in pips represents a profit or loss in your Forex trade.

When currency is a quoted, they are mainly quoted to the 4th decimal place.

This is also true for silver and heating oil.

Exception of pairs that includes the Japanese Yen as well as commodities such as Gold, Oil Brent and Gas which are quoted to 2 decimal places.

Example of 1 pip movement

When we look at the EUR/USD pair and see it moved from 1.3130 to 1.3131, it has moved one pip, because the 4th decimal point has increased by 1.

A 1 pip move for the USD/JPY, we can see as 77.60 to 77.61, because the second decimal point has increased by 1.

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