What is a pip in forex trading?

Solution
In forex, a pip is a measure of price movement. Thus, if one exchange rate moves 100 pips and another 300 pips in one day, the second exchange rate will have displayed a bigger movement.

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Fat Finger

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In forex, a pip is a measure of price movement. Thus, if one exchange rate moves 100 pips and another 300 pips in one day, the second exchange rate will have displayed a bigger movement.

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The word pip is an abbreviation for percentage in point. A pip is usually equal to 0.0001 in exchange rates of the USD and many other pairs. Many brokers also show you parts of a pip when trading, i.e., a fifth decimal number 0.00011.

Usually, traders measure their trading performance by calculating the number of pips they managed to catch in a single day, week, or month. Many signal providers promise to deliver a minimum number of pips per month, for example, 1000 pips per month.

Using pips is helpful in that it helps benchmark trading performance. For example, if you know a trader that catches at least 100 pips per week, he is doing better than a trader who catches only 20 pips after calculating lost pips. This helps compare traders’ performance despite the difference in their account sizes.

The amount of money you make if you managed to catch ten pips, for example, varies depending on the size of your trade. If you are trading one standard lot of EURUSD for example, then every pip you catch will give you $10 in profit, and thus 10 pips will help you earn $100. The value of 1 pip when trading 1 standard lot on other instruments can vary based on your account currency and the exchange rate in question.
 
Solution

ele020

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pip is basically the unit of measurement of profit or loss when it comes to trading. The profit/loss is first calculated in decimal places (which is the difference between open and close price of the trade.) If we take an example of EURUSD, the open price for a trade be 1.18633 and close price be 1.17990 for a sell order. Here the profit is open - close price i.e. 0.00643. here profit in pips is 64.3 (as 5th decimal place is a fractional pip also called pipettes) thus, considering the value of 1 pip is $10. total profit in this case will be $643.
 

Eryk Martin

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pip is basically the unit of measurement of profit or loss when it comes to trading. The profit/loss is first calculated in decimal places (which is the difference between open and close price of the trade.) If we take an example of EURUSD, the open price for a trade be 1.18633 and close price be 1.17990 for a sell order. Here the profit is open - close price i.e. 0.00643. here profit in pips is 64.3 (as 5th decimal place is a fractional pip also called pipettes) thus, considering the value of 1 pip is $10. total profit in this case will be $643.
Greatly explained, with a clear cut example. :) :)
 

Fenrilrajas

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Pip is the minimum change in price movement. Simply put, it is a standard unit to measure how much the exchange rate or other quotes have changed. As a rule, when talking about price changes, it is the pips that are used, because it allows you to talk about volatility without being bound to real numbers.
The main advantage is that it is the same for all platforms and brokers, so traders can compare quotes and their changes without confusion or misunderstanding.
 
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