Basic Forex Education_5. What_s a PIP

Lesson 5: What's a PIP A PIP is the exchange rate for a currency pair or a measurement of change. For currency pairs, displayed as decimals, one bit is equal to 0.0001. The exception here is the Yen-based pairs which are quoted with only two decimal places. Nowadays some brokers offer fractional PIPs or PIPETTES to provide some extra precision and are displayed as a fifth decimal place. How to calculate your PIP Value The value change in the quote currency, divided by the exchange rate ratio - times the amount of units traded, is PIP Value. The Exchange rate for EUR/USD is 1.3000. You will have to divide the value change in quote currency 0.0001 by the exchange rate 1.3000, times the unit of amounts traded. If it is a mini lot which has 10,000, the value would be 0.76. To convert this to your account currency all you have to do is to multiply this with your currency’s exchange rate. So if you are living in the USA, you have multiply 0.76 by1.3000, which is 0.98 US Dollars.