What is Pip Value?
How it is determined? I read somewhere that pip value is adjusted by the amount we invest and the leverage. It is confusing me. The previous knowledge tells me that "Pip = difference between bid price and ask price"
So please explain it to me.
Pip and Pip value are not same things
Pip = smallest increment or decrement in price e.g 4th decimal place in eur/usd i.e. 0.0001 whereas 2nd place in case of jpy i.e. 0.01
Pip value Trade volume (not investment) affects the pip value. e.g trade volume of $10k in eur/usd means pip value of $1. Any increase or decrease in leverage will also affect pip value.
Bee There is no term like "sufficient money". So aim for a satisfied life.
Thank you bee. It was a nice explanation. Totally understand it now.
It clears some doubts from my mind too :).
Originally posted by ChampIt clears some doubts from my mind too :).
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PIP - As it means Percentage in Point and the smallest movement in the price is known as pip and there are some brokers who deal in 5 decimals and some in 4 decimals. Also a trader chooses or determines the value of the pip according to his style and investments.
Originally posted by BeePip and Pip value are not same things
Pip = smallest increment or decrement in price e.g 4th decimal place in eur/usd i.e. 0.0001 whereas 2nd place in case of jpy i.e. 0.01
Pip value Trade volume (not investment) affects the pip value. e.g trade volume of $10k in eur/usd means pip value of $1. Any increase or decrease in leverage will also affect pip value.
Nice explanation. Brief but excellent.
Pips (or points): A term used in the exchange market to represent the smallest increment possible exchange rate.
Originally posted by FXlordPips (or points): A term used in the exchange market to represent the smallest increment possible exchange rate.
Pip value is determined by the trader when they trade and they choose their pip value or lot size based on their investments and trading style and their goals and targets.
the value of a pip calcilated on the second currency of the pair = size position/10000, or size position/100 in case of JY
Its weird that brokers consider pips to be 0.0001 of a cent movement on eur/usd, yet most trading sites take 0.001 to be a pip... Even my platform only allows limit orders to be placed within 30 pips, or 0.003 of a cent, but I would consider that to be 3 pips. Yet they consider their spreads to be 1-1.6 pips, yet by their platform, this should be 10-16 - no wonder its confusing - brokers can't make up their minds.