WHAT IS PIP IN FOREX

PIP value and spreads

 

"PIP" stands for "Percentage in Point" or "Price Interest Point" in the context of foreign exchange trading. It is a common way to measure how much the value of a currency pair has changed.

Currency pairs, such as the Euro/US Dollar or the British Pound/Japanese Yen, are quoted while trading foreign exchange. Due to different variables like economic data releases, geopolitical events, and market emotion, the exchange rates between these currency pairings are continually changing.

Price Interest point (PIP) is the term used in currency market to represent the smallest price increment in a currency. It is often referred to as ticks or points in the market. In EUR/USD, a movement from .9018 to .9019 is one pip. In USD/JPY, a movement from 128.50 to 128.51 is one PIP.


Average trading range

EUR/USD     76 PIPS

USD/JPY       105 PIPS

GBP/USD      96 PIPS

USD/CHF     140 PIPS

AVERAGE/TOTAL  104/417 PIPS

Pip Values – according to normal trading platform from $7.00 to $10.00 USD.

Pip Spreads – according to normal trading platform from 3 to 20 pips.

Volume

The trading volume measures how much “money” is being traded. During some types of news breaks and when the New York’s exchange is open, the volume is obviously higher. The volume indicates us that more things can change. There no real strong correlation for volume, good trades is being developed even when the Forex volume is relatively low.

Buying and Selling short:

Buying = term to use when buying a currency pair to open a trade.
Selling short = term to use when selling a currency pair to open a trade.

Both terms, refer to things we do to open a trade.

On the other hand, to exit a trade, you will have to use the terms “selling” and “buying-back”. The term “selling” refers to what we do to exit a trade that initially started by “buying”. The term “buying-back” refers to what we do to exit a trade that initially started by “selling-short”.

Basically the term, “selling-short” can be referred to the futures and commodities market. For instance the mentality of buying a field to plant vegetables that will grow in the future is the same thing than buying a currency and to predict that it will eventually go short.