What is pips in forex trading & how to calculate

What is pips in forex trading

We all know that Forex is a business. We do business in order to make a profit, but sometimes we lose a lot. These gains and losses are calculated - through a unit. Such as kilograms, liters, dozen, etc.

Example:

Think, A fruit trader earned 500 dollars by selling 100 kilograms mango. How many dollars per kilogram did he earn here?
Answer is 500/100 = 5 Dollars.
Here 500 dollars is gross profit,
100 is the total unit & 5 is profit per minimum unit.
Through this minimal unit, all the businesses in the world operate. There is no exception also to Forex trading. Forex trading profits and losses are calculated in this way. Don't worry, you don't have to hard work to calculate your profit or loss. With the automated software [MetaTrader 4 or MetaTrader 5 & Broker's Webpage], you will do Forex trading, you will see every updated with your profit or loss every time. You will be happy to know that Forex is not like any other ordinary business. Products can be profitable even if prices are falling low. So it is very important to know about the unit of profit or loss calculation of Forex trading. its name is pip & plural name is pips.

What is pips in forex trading

How to make pips in the forex trading market

Here I am discussing something very simple. This may seem irrelevant to many. But for those who are new to Forex, they should be easy to understand - I am trying that. For those who know better, please share your knowledge with us by place a comment. We know that 60 seconds is equal to one hour 60 milliseconds is equal to 1 second, Similarly, 10 pipettes equal to 1 pip. Pipettes are the fifth number after the decimal value of the commodity. All currencies in the Forex market have four numbers after the decimal point, but the Japanese yen has two numbers after the decimal.

Example of pipettes

1. First - EUR/USD = 1.10188
2. Second - EUR/USD = 1.10189
3. Third - EUR/USD = 1.10180

Here 8,9, 0 are pipettes 8, 8, 9 are pips

Explain:

• In the second example, we can see that Pipettes increased from 8 to 9 but Pip did not increase.
• In the third example, we can see that Pipettes increased from 9 to 10 [0] and Pip increased from 8 to 9.

Here we can see the change in the 1 pip. We already know that 10 pipettes equal to 1 pip. I hope you understand, if any query, please place a comment, I will replay you.

Example of PIP / PIPS

1. Second - EUR/USD = 1.10189
2. Third - EUR/USD = 1.10190

Explain:

In the second example we can see that Pipettes increased from 9 to 10 [0] and Pip increased from 8 to 9.Here we can see the change in the 1 pip
How much profit or loss does one pip change make?