Before entering the (Forex) market trading, mastering the key concept of Pip is the foundation of success. Whether you are a beginner just starting to explore forex or an experienced investor, a deep understanding of the meaning, calculation, and role of Pip in risk management will directly impact the quality of your trading decisions.
What exactly is a Pip? The unit of price measurement in the forex market
Pip is the abbreviation of "Price Interest Point," which is the smallest unit used to measure price changes in currency pairs in the forex market. In most currency pairs, a Pip represents a change in the fourth decimal place.
Basic definition of Pip
Imagine you are trading the EUR/USD currency pair. When the price moves from 1.0614 to 1.0615, this 0.0001 change equals 1 Pip. This seemingly tiny change,