The Meaning of Pips in Foreign Exchange

immadmarketer — Fri, 29 Jan 2010 00:02:37 +0000

You regularly hear the word pips when it comes to foreign exchange trading. But ever puzzled over what are the pips and how they are calculated? The term pips means the tiniest price change. What’s the littlest change is defined by brokers and it is used in programs like Pip Android. For instance, in EURUSD currency pair, the prices are shown in 4 decimal digits. That implies a pip is 0.0001. But some brokers sometimes use 5 digits, in which case a pip changes accordingly . What’s the use to add pips, you’ll wonder. Why not count profit and loss in real money without additional calculations? Well, pips allow traders to communicate in same terms without exposing their actual monetary investments. That’s an extremely important aspect.

Foreign Exchange Brokers

imlight — Tue, 29 Sep 2009 18:23:11 +0000

In order to be a successful trader you must select a good forex broker. The broker should be in business for at least several years. He should give you as small spreads as possible. For instance EUR/USD spread should be less pip or less. Also spread must be notfixed. Because during news releases there are a lot of volatility and brokers with fixed spreads much of the time won’t give you the price you want. Brokers that offer non-fixed spreads at least are honest and show you real bid and ask quotes. Also broker should be regulated by NFA(if it is based in United States). Many brokers offer some bonus services such as news or charting packages.

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The Meaning of Pips in Foreign Exchange

Foreign Exchange Brokers