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If you are analyzing forex currency trading, you are destined to run into people talking about forex pips. Loss and gain are weighed in pips so understanding it is vital.

The spread, that is the difference between bid and ask prices, is also evaluated in pips. Without any doubt the little forex pip cannot be evaded.

Actually pip is abbreviation of percentage in point or price interest point. It is the lowest increment of changes in values. Price fluctuations can be estimated via percentage points rather than money value.

Why do we have to talk in pips? The reason for this is easy. Even though the forex market is a global one, there is an unavailability of a global currency.

The US dollar may be the most generally traded currency but it is not engaged in all trades. Furthermore, a few cross rate trades squash the USD altogether, such as EUR/GBP so measuring the deal in USD is futile.

Instead, we need something that is a small percentage of the value of the respective currencies we are handling. This indicates that the monetary value of a pip varies as per the currency in forex trading.

Generally, four decimal points are used to quote currencies. A typical EUR/USD bid amount could be 1.3642 and its ask price would be 1.3644. The bid and ask variation aka the spread is .0002 or 2 pips. Ergo, the pip would be 0.01% of the lot.

Thus given a lot magnitude of $100,000, a single pip's worth would be $10. For a lot quantity of $10,000, one pip would be equal to $1.

The given data is the pip value when quote currency is the USD. With a different cur

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