CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
A pip (short for "percentage in point") is a unit of measurement for price changes in currency exchange rates. It is commonly used in Forex trading to track price movements.
For most currency pairs, a pip is the fourth decimal place in the exchange rate, equal to 0.0001.
💡 Example
1. GBP/USD
If the Sell price is 1.3020 and the Buy price is 1.3022, the difference is 2 pips.
2. USD/JPY
For currency pairs involving the Japanese yen (JPY), a pip is the second decimal place, equal to 0.01, since JPY quotes use two decimal places.
If the Sell price is 109.68 and the Buy price is 109.71, the difference is 3 pips.
Why are Pips important?
Pips are essential in Forex trading as they help measure price changes and determine profits or losses. Understanding how pips work allows traders to calculate potential gains, losses, and trading costs more effectively.