Discussion in 'Forex Trading' started by jgadefelth, Jun 1, 2005.
what is a pip ?
and where can i learn more about currency trading?
hello, welcome to Hell. ground zero of the forex message boards.
a "pip" is simply a unit of measurement.
let me explain.
let's say you have one dollar USD. it would be expressed like this:
those zeros represent one dime, and one penny (at the end).
in currency-trading they need a finer system of measurement beyond the penny (the last 0).
so they extended it.
one dollar ($1.00) becomes:
the last two zeros are 1/10th of a penny and 1/100th of a penny.
(penny also meaning cent).
they do this because in the Interbank they trade huge blocks of money, in the billions of dollars at once between nations, so they wanted extra calibration to exactness to make sure none of the trading partners were not short-changed.
www.goforex.net and www.investopedia.com
a PIP = Price interest Point = 1/1000th of a penny aka 0.0001 dollars
1 lot is considered 100K aka $100,000
1 mini-lot is known as 10K aka 10grand, 10K, $10,000 etc
basically with 1 mini-lot each PIP = $1 up or down and with 1 lot each PIP = $10 up or down.
When you put 1M (million) on the line then it becomes $100 each PIP up or down.
www.OandA.com has some good reads too.
The only reason they talk about PIPs is to make P/L's (profit's and losses) easily calculatable in your head. You can trade with any unit (unit = the amount that the rate gave you at that time... just think of it as dollar amounts and it's easier).
You beat me to it by 5 seconds Skalpz! haha
Here a PIP, there a PIP, everywhere a PIP PIP!
Can I get a PIP PIP in the houuusse!
SOMEONE SERVE THIS MAN A PIP!