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.