Dealing With Forex Pips

By Bart Icles

Do you have any idea what pips are? Have people ever told you anything about pips? Well, do you even know what pips are? Pips, as many refer them to, is a unit of measurement when the currency goes up or down. Sometimes, other people see it as an increasing point or a decreasing point in the stock market. In forex, the forex pip is like an abbreviation for Price Interest point.

You know, every country has different kinds of money; rather, there are different names for money in different countries. Pesos for Mexicans and Filipinos, Yen for the Japanese, Euro for the Europeans, and the list goes on. Each of these has their own dollar equivalent. Prices sometimes range from 50 cents up to two dollars depending on which currency you're eyeing. These prices may change depending on the way that the values of the currencies go up and down.

Adding the number of lots you trade will definitely give you more profit per pip raised. For example, if one dollar is the forex pip value and you trade one lot, the value of the trade goes up with every one dollar pip movement. With five lots, the value you gain or lose will vary from each pip movement, either going up or down.

Studying the forex pips in the beginning is even more important that studying just the dollars. From the example given above, you can certainly see that there is a big impact on your earnings if you know how to manipulate your trading skills with the use of the pips. By being pip-minded rather than money-minded, you, as the trader, will find it emotionally easy to trade compared to dealing with real money.

A lot of brokers nowadays has a software that they call the "pip calculators." Going to their sites, you can plug in numbers and currency pairs that you are currently working on and you will get the dollar value of each pip. In time, you will be aware that pairs that end in the same cross currency pair will most likely have the same forex pip value. You know, some people think that learning these kinds of stuff is only small talk, but to be completely honest, its even more helpful to learn the small talk rather than jumping all the way to the big stuff. Forex pips are very important especially if you are serious with you whole forex career. - 23199

About the Author:

A good forex video course starts with a desire to learn and a drive to become a great trader. Learning with free forex courses takes dedication and a good teacher. But once you learn how to trade and do so successfully your life will change and you have options and financial resources you never had before.