What is a pip? A pip is the smallest unit of currency rate change. While trading in the Forex market, you will have to closely monitor the currency rates and how they change.
You will be able to do so easily using the Market Watch panel of your MetaTrader 4 terminal: You have probably noticed that the panel shows the currency exchange rate, bid and ask, which is constantly changing, and this rate is usually a fraction consisting of an integer number and some numbers that follow after the point.
Now, easy money for everyone pip represents one ten-thousandth of the currency rate, though for JPY and some other rates it is one-hundredth.
Thus, the amount of pips reflects how much the price changed and, eventually, how much you are profiting or losing. So, this is, as said above, the minimum change reflected in the currency pair, one ten-thousandth of the rate or the fourth digit after the point for JPY rates, option pip price will be the second digit.
How to Calculate Pip Value?
Why should I need those pips? The answer is that you should need them to know your profit and loss.
To convert the amount of pips into the amount of cash and to know exactly how much money you won or lost, you must first learn how to calculate the pip value. Rate this post: 16 votes, average: 4.