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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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  • #forex #mkt CMNTS: crazy day , scalping big time normally 100 pips in day , today 10 times more:) http://piphut.com

    by PipHutComments (PipHut.com) Thursday, 21 January 2010 17:49

  • Do You Really Want This ? 15 Minute Forex Scalping System Consistently Makes 20 Pips A Day http://bit.ly/8QbqHq

    by ForexTraderFast (Andy Trader) Thursday, 21 January 2010 17:34

  • RT @PipHutComments - #forex #mkt CMNTS: I took +50 pips on buy off the (2) bullish candlestick alerts on 30 min (hammer & doji) and al...

    by brokerz_bullish (Brokerz bullish news) Thursday, 21 January 2010 17:29

  • forex mkt CMNTS: closed allready. twice in one day 150 pips from the Gold. http://piphut.com:

    by jay_visaya (jay_visaya) Thursday, 21 January 2010 17:19

  • RT @FireandSword Canadian Dollar makes headlines and brings some pips. Take a look. http://cli.gs/d5uS6H #forex, #market

    by twtrmaven (Joe P) Thursday, 21 January 2010 17:19

  • #forex #mkt CMNTS: closed allready. twice in one day 150 pips from the Gold. http://piphut.com

    by PipHutComments (PipHut.com) Thursday, 21 January 2010 17:18

  • #forex #mkt CMNTS: I took +50 pips on buy off the (2) bullish candlestick alerts on 30 min (hammer & doji) and also s... http://piphut.com

    by PipHutComments (PipHut.com) Thursday, 21 January 2010 17:18

  • Canadian Dollar makes headlines and brings some pips. Take a look. http://cli.gs/d5uS6H #forex, #market

    by FireandSword (Mike Kulej) Thursday, 21 January 2010 17:01

  • Forex Signal Service Averages 284 Pips Per Week.: Massively Successful Forex Signal Service Is The Perfect Upsell/... http://bit.ly/7xLYCC

    by ImpactNS (Marty Lan) Thursday, 21 January 2010 16:58

  • #forex Trade 85710267 Closed EURCHF buy 1.4725 Pips: 11.9 total: 549.3 autotrade: http://bit.ly/6ZyYIG info: http://bit.ly/6DSyW4

    by FxSignals4Free (Kamil Burzynski) Thursday, 21 January 2010 16:53

  • #forex Trade 85737845 Closed EURGBP sell 0.87 Pips: 10.1 total: 537.4 autotrade: http://bit.ly/6ZyYIG info: http://bit.ly/6DSyW4

    by FxSignals4Free (Kamil Burzynski) Thursday, 21 January 2010 16:50

  • Stopped out of $EURJPY long at -20 pips. #forex

    by BlackmanCapital (Jeffrey Blackman) Thursday, 21 January 2010 16:30

  • FOREX followup: EUR/USD continuation continues, today's low 1.4029 & currently down 54 pips. YEN pairs took the lead from last night SHORT

    by WTV_Kevin (Kevin Dixon on WTV) Thursday, 21 January 2010 16:26

  • Short at E/U 1.45163 7 days ago and get around 500 pips, continue to short. Strong bearish #forex #short #fx #forexman0019

    by forexman0019 (forexman) Thursday, 21 January 2010 16:13

  • Closed Sell GBPUSD 1.62066 for +9.6 pips, total for today +18.5 pips http://bit.ly/5R1FDf #forex #fx

    by KagiFXtrading (Ian_Kagifx) Thursday, 21 January 2010 15:46

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