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==== ==== Make Money In Forex With Million Dollar Pips ==== ====

If you are interested in forex currency trading you are sure to have seen mention of forex pips on a lot of websites. You probably worked out that foreign exchange traders use them as a measure of gains and losses. They will talk about setting a stop at 10 pips, or boast of a huge profit of hundreds of pips from one trade. If you plan to become a currency trader yourself, you do need to understand forex pips and what they mean in real money terms. The word 'pip' stands for percentage in point (or some say, price interest point). It is the smallest increment of price change, and allows us to measure a rise or fall in currency prices in percentage terms instead of in dollars and cents. Why do we need to do this? The reason is simple. All currencies of the world are traded in the forex market. Sure, the US dollar is the most traded currency but it is not involved in all trades. You can trade crosses, that is two other currencies such as EUR/GBP. With a pair like that it would make no sense to express your gains and losses in US dollars. So instead, we use a value that is a small percentage of the quote price of any currency pair. That is a pip. Most currencies are quoted to four decimal points and then a pip is 0.0001 of a currency unit. For example, say the bid price for EUR/USD is 1.3505 and the ask price is 1.3507. The spread (the difference between the two) is 0.0002 or 2 forex pips. In money terms, the pip is 0.0001 times the lot size of the quote currency. So for EUR/USD, if your lot size is $100,000, one pip is $10. If your lot size is $10,000, a pip is $1. But if the quote currency is not USD, then a pip will be 0.0001 times the lot size in the quote currency, whatever it is. If you are trading EUR/GBP with a lot size of 100,000 British pounds, one pip is 10 pounds. Just to make things more complicated, there is also the Japanese yen whose value is so low that it is only quoted to 2 decimal places. The price of USD/JPY might be 112.20. Now one pip is 0.01 times the lot size but in yen, not dollars. So you might have a lot size of 10 million yen, giving a pip size of 1,000 yen which at that exchange rate would be worth $11.22. This may seem confusing at first but you will find it very simple provided you only deal with one lot size and one currency pair when you are starting out with forex currency trading. Then you will soon be familiar with the value of forex pips for that currency pair.

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==== ==== Make Money In Forex With Million Dollar Pips ==== ====

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