A Beginner's Guide to Forex Pips

PIP, is the acronym of percentage in point. It’s a measuring scale of price widely used in FOREX trading. Let’s take the stance if the currency pair let’s say EUR/USD is trading at 1.4000 then changes to 1.4010, the pair is said to have a move of 10 PIPS. Currencies are quoted out to four decimal places in wholesale market with the last placeholder called a pip or a point. PIP is mostly 1/10000th of an exchange rate. PIP indicates the smallest possible movement in the price of a currency pair. You not only need to formulate strategic analyses but also have to understand the concept of FOREX PIPS if currency trading is a profitable attempt for you.

Now you need to know what FOREX TRADING is, it is the selling of one currency and buying of the other concomitantly. Foreign exchange market is the world’s largest financial market; they are prominent to have a trade of $3 trillion daily. Forex market is hundred times larger than the New York stock exchange, it has no central trading location, and meaning of transactions is done via internet or telephone. Before entering you also need to know about Forex market Basics. Forex market is all about selling and buying currencies, it is always traded in pairs. So in order to understand Forex market basics you need to become familiar with the most commonly traded pairs.

While this sounds so exciting you further need to know that all traders in Forex need to have Forex leverage. So what is Forex leverage, well it allows a trader to open a position for an amount that is greater than the total margin they already have in their account for further details you can also read through other articles in the blog.