a pip is a unit of movement or measurement in forex tradingLet's continue reviewing the basics. What is a pip in forex trading?
It is a measure of price movement.Let's continue reviewing the basics. What is a pip in forex trading?
Is this because the JPY is a very low-valued currency?Pip stands for Percentage in Point. A pip is simply the smallest unit of measurement for price changes in a currency pair. It's short for "Percentage in Point." 1 pip equals 10 points, or what we call "pipettes." Usually, you'll see the value of a pip represented by the fourth decimal place in a currency price. For example, if 1 Euro is valued at 1.0521 USD and it changes to 1.0522 USD, that means it moved by 1 pip. In other words, it went up by 0.0001 USD. But wait, there's a small exception when it comes to the Japanese Yen (JPY). If a currency is paired with the Yen, then there are only two decimal places involved. So, if the USD to JPY price changes from 101.48 to 101.49, it moved by 1 pip.
Actually, the reason the Japanese Yen (JPY) is an exception when it comes to pip calculation is not necessarily because it's a low-valued currency, but rather a historical convention. In the past, the value of the Yen was much higher compared to other major currencies like the US Dollar (USD). To accommodate this, the pip calculation for JPY pairs was set with only two decimal places, making it easier to quote and interpret the currency's value.Is this because the JPY is a very low-valued currency?