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Pips

The pip is defined as the smallest increment a currency pair can take. For instance, for the USD/CAD pair, a pip is 0.0001. For the USD/JPY pair a pip is 0.01. A pip is also known as a point.

Recently, many Forex brokers changed their price quotes from a 4 digit quote to a 5 digits one. This practically changed the smallest increment a currency pair can move, but the pips have remained the same.

There used to be a trick that you could use with 5 digits quote to know what a pip is, but it doesn't work everytime anymore:

The trick is simple: take the exchange rate and count 5 digits backwards. For instance, today, the USD/CAD is at 1.04328 (a 5 digit quote). Count 5 digits from the first: 1, 0, 4, 3, 2. The 2 is the 5th digit in the quote and it's at the 4th position after the decimal point, so a pip for the USD/CAD is 0.0001. This is also true for the EUR/GBP, EUR/USD and a lot of other currency pairs.

For the USD/JPY it's a different story. The USD/JPY exchange rate was historically over 100 Yen for a Dollar. This is why the Pip value for the USD/JPY is 0.01. However, the USD has lost value in relation to the Yen, so it's value today stands at 86.693. Even so, a pip is still 0.01, because this used to be the place of the 5th currency in the quote. This is also true for the CHF/JPY and other currencies involving the Yen.
 
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  • mine ar still pending since fiday 15jan.. negative pips RT @FXstreetNews: #Forex: $USDJPY small gains, trading 91.97 http://nn.nf/1benw

    by maddogdude (Dude Mohd Iqbal) Monday, 18 January 2010 06:56

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    by aatradersclub (anders baard larsen) Monday, 18 January 2010 06:51

  • Forex Signal | Close(SL) Sell EURUSD@1.43936 | Loss:-35 pips | 2010.01.18 06:45 GMT | #fx #forex #fb

    by pelero (Pelero Forex Broker) Monday, 18 January 2010 06:45

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    by millionairesexy (Millionaire Sexy) Monday, 18 January 2010 06:35

  • Closed Sell GBPUSD 1.63124 for +28.2 pips, total for today +64.5 pips http://bit.ly/5R1FDf #forex #fx

    by KagiFXtrading (Ian_Kagifx) Monday, 18 January 2010 06:15

  • Order ID: 5 | Order Cancels Order | $CADJPY Sell 87.90 or Buy 88.60 | Stop Loss: -70 Pips | Take Profit: 40-80-120 Pips [ #Forex #MKT ]

    by FirePips (FirePips) Monday, 18 January 2010 06:02

  • Order ID: 4 | Order Cancels Order | $EURUSD Sell 1.4335 or Buy 1.4390 | Stop Loss: -55 Pips | Take Profit: 40-80-120 Pips [ #Forex #MKT ]

    by FirePips (FirePips) Monday, 18 January 2010 06:02

  • Order ID: 3 | Order Cancels Order | $EURJPY Sell 130.10 or Buy 131.00 | Stop Loss: -90 Pips | Take Profit: 50-100-150 Pips [ #Forex #MKT ]

    by FirePips (FirePips) Monday, 18 January 2010 06:01

  • Order ID: 2 | Pending | $GBPJPY Buy 148.55 | Stop Loss: -100 Pips | Take Profit: 70-140-210 Pips [ #Forex #Currency #MKT ]

    by FirePips (FirePips) Monday, 18 January 2010 06:01

  • Order ID: 1 | Pending | $GBPUSD Buy 1.6325 | Stop Loss: -60 Pips | Take Profit: 50-100-150 Pips [ #Forex #Currency #MKT ]

    by FirePips (FirePips) Monday, 18 January 2010 06:00

  • http://www.forexdiscussion.com/forex-eurjpy-soft-5-pips-recouping-losses/

    by forexdiscussion (Forex Discussion) Monday, 18 January 2010 05:30

  • Forex: AUD/USD -25 pips: FXstreet.com (London) - The AUD and NZD both have traded slightly off this session consol... http://bit.ly/4SCoyi

    by forexmoney4you (Jenny G) Monday, 18 January 2010 05:28

  • Forex: AUD/USD -25 pips - Forexrazor http://tinyurl.com/ydzn8uh

    by tickbot (Tickbot Trading, LLC) Monday, 18 January 2010 05:22

  • #Humphreybo Forex: AUD/USD -25 pips: Gold was down early but has since stabilised at $1132. AUD is currently tradi... http://bit.ly/4P3RDE

    by humphreybo (Humphrey Bo) Monday, 18 January 2010 05:18

  • #forex Forex: AUD/USD -25 pips http://ow.ly/16mrAC

    by biz_buzz (BizBuzz) Monday, 18 January 2010 05:16

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