As a beginner in Forex Trading many terms are important to learn where pips are one of the common term. The pips are an important part of the Forex trade and you will see it references through many of the transactions that you make.
Pips are the smallest price chance in that currency exchange rate. In Forex, the market works by trading currency of one country to that of another country. As you can imagine, there are different values here, and that is the overall benefit to trading money.
For example, recently, the current rate for the Euro and Dollar cross (EUR/USD) was 1.4000. If you added one pip to this, it would equate to 1.4001 for the EUR/USD. In other words, the very last place in the decimal place in this rate is the smallest change in the value of the currency. In this case, the EUR/USD pair has the 1.4001 rate, which is the smallest increase possible.
It is common to see the pips increase by a specific amount, or you may notice that people are saying that the rate went up five pips or ten pips. This simply means that it went up by that amount added onto the end of the number. If the above mentioned cross was at 1.400 and it went up five pips, then it would read EUR/USD equals 1.4000 plus (the lowest increase possible) 0.0005 which equals 1.4005. This is a five pip increase.
If you are trading in Forex and you are looking at a chart, you can see this pip change by looking at the very last price bar. It will show you the rate of the increase in the cross. This information can then be used to help you to place additional transactions, or in other words, tohelp you to buy or sell. The pip is an important part of the currency fluctuation in value and is something to monitor as you are trading
No comments:
Post a Comment