Forex Pips

Forex Pips is percentage in point, that is the smallest amount is the currency quote, mostly the forth digit after the point in a currency pair. For example EUR/USD – 1.4437, number 7 is the pip of this quote and every movement up or down will be in pips. The only currency that the pip is not the forth digit after the point is the Japanese Yen that the second number after the point is the pip, for example USD/JPY – 80.03.

The Forex pip is used to check the change of the quote and to know how mach you have profited or loosed.
The basic amount of trading is called a lot – 100,000 units of the Base currency and every movement of the pip can affect the lot, if the quote was EUR/USD – 1.4437 and after one hour it is 1.4439 there is a movement of 2 pips, you have profit/loss of 100,000*0.0002 = 20 Euro (the base currency). The pips help us to calculate the profits and traders decide to take profit of stop loss according to amount of pips.

When you but a currency pair by a Forex broker there is commotion between the buy and sell from two pips in the major pairs and more in less common pairs. This is the Brokers profit and you have to be aware of the amount of pips you loss as every pip is worth money, that is way Forex brokers want you to be happy and invest in there platform, the more traffic they have is more profit from pips from every transaction. Some Brokers have even 5 digits after the point and give you a option to trade1/10 of a pip.