The most important thing a new Forex trader must do is to lean how to understand the value of a PIP in a paired currency. A PIP is the acronym for Percentage In Point, or Price Interest Point which is the smallest measure of value in any paired currency in Forex.
Currency pairs are quoted accurately to the fourth decimal place because Forex transactions are mostly involves large sums, and Forex spreads are the exact opposite. This defines the smallest movement of a paired currency and is called a Pip. An example would be: if the USD/EUR moves from 1.2345 to 1.2346, then the Pip would be 1. If it changes from 1.2345 to 1.2305, the change in Pip would be 40 Pips. On the currency market, there are the 6 widely-traded called the majors that is made up of the following:
* EUR/USD, also called the 'EURO" * GBP/USD, also called the "CABLE" * USD/CHF, also called the "SWISSIE" * USD/JPY, also called the "NINJA" * USD/CAD, also called the "LOONIE", or "BEAVER" * AUD/USD, also called the "AUSSIE" *
Of the 6 majors, the EUR/USD is the most widely traded currency paired, with an average of 100 Pips per day.
Also, profits and losses are measured in Pips, with the exception of the USD/JPY, since it is quoted at the second decimal place due to having a cent or of a hundredth in some major currencies. The yen's Pip value is .01, while other majors are placed at .0001.
If you trade the currency pair of USD/JPY at 110.95 and moves to 111.0, it gained 5 Pips. With a quote of 77.48 that changed to 77.53 would mean a 5 Pip increase. If it were the USD/CAD pair while at 1.0234, then changes to 1.0224, 10 Pips would have been lost. Trading with the AUD/USD with an exchange quote of 1.9876, the Pip equivalent is .0001, as it set by market makers at 4 decimal places.
So, in Forex trading "30 Pips" would mean thirty units of value in trading. Since individual currencies have different quotes in terms of Pips, it's important to take note of such differences so as not to get confused in your trading. Dealing with large sums might seem daunting at times, but will get easier gradually as you begin to get acquainted with Forex trading as time passes.
The important thing to remember is that most currencies are placed at the fourth decimal place, such as those paired with the USD, or .0001, except the Yen. If you always keep in mind what a Forex Pip is, as also that each respective currency pair has a different value to it, you'll do well in your everyday trading. - 23309
Currency pairs are quoted accurately to the fourth decimal place because Forex transactions are mostly involves large sums, and Forex spreads are the exact opposite. This defines the smallest movement of a paired currency and is called a Pip. An example would be: if the USD/EUR moves from 1.2345 to 1.2346, then the Pip would be 1. If it changes from 1.2345 to 1.2305, the change in Pip would be 40 Pips. On the currency market, there are the 6 widely-traded called the majors that is made up of the following:
* EUR/USD, also called the 'EURO" * GBP/USD, also called the "CABLE" * USD/CHF, also called the "SWISSIE" * USD/JPY, also called the "NINJA" * USD/CAD, also called the "LOONIE", or "BEAVER" * AUD/USD, also called the "AUSSIE" *
Of the 6 majors, the EUR/USD is the most widely traded currency paired, with an average of 100 Pips per day.
Also, profits and losses are measured in Pips, with the exception of the USD/JPY, since it is quoted at the second decimal place due to having a cent or of a hundredth in some major currencies. The yen's Pip value is .01, while other majors are placed at .0001.
If you trade the currency pair of USD/JPY at 110.95 and moves to 111.0, it gained 5 Pips. With a quote of 77.48 that changed to 77.53 would mean a 5 Pip increase. If it were the USD/CAD pair while at 1.0234, then changes to 1.0224, 10 Pips would have been lost. Trading with the AUD/USD with an exchange quote of 1.9876, the Pip equivalent is .0001, as it set by market makers at 4 decimal places.
So, in Forex trading "30 Pips" would mean thirty units of value in trading. Since individual currencies have different quotes in terms of Pips, it's important to take note of such differences so as not to get confused in your trading. Dealing with large sums might seem daunting at times, but will get easier gradually as you begin to get acquainted with Forex trading as time passes.
The important thing to remember is that most currencies are placed at the fourth decimal place, such as those paired with the USD, or .0001, except the Yen. If you always keep in mind what a Forex Pip is, as also that each respective currency pair has a different value to it, you'll do well in your everyday trading. - 23309
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Forex investment team starts with a desire to learn and a drive to become a great trader. Learning the best forex trading software takes dedication and a good teacher. But once you learn how to trade and do so successfully your life will change and you have options and financial resources you never had before.
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