Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76 % 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.

Glossary

Pip (Percentage in Point)

A point in percentage or pip is a standardized unit of measure in an exchange rate. In forex, the value of the exchange of a currency is represented in pips.  Major currencies are priced to four decimal points, excluding the Japanese yen, which is priced to two decimal points only.
  • Most currency pairs, one pip = 0.0001
  • Currency paired with Japanese Yen, one pip = 0.01
  Most currency pairs, such as the USD/EUR, trade-in 4 decimal places ( 1 pip = 0.0001) and trade in terminals in 5 decimal places ( 1 technical pip = 0.00001). Spreads, order distances, and other parameters are normally quoted in 4 decimals in company websites; however, in trading platforms, they are quoted in 5 decimals. Most currency pairs trade in 4 decimal places except currencies paired with the Japanese Yen, where the pip is 0.01, and the technical pip is 0.001.   For example, the currency pair GBP/USD. Assume that its buy price is 1.68551.  If it changes from 1.68551 to 1.68552, that means it increased by 1 technical pip. If the price changes from 1.68551 to 1.68550, that means it decreased by 1 technical pip. In the currency pair USD/JPY, an increase of 1 usual pip means that from 125.87, it rose to 125.88.  To manage your risks, you must learn the pip value of each position.   Calculating Pip Value The value of a pip depends on these three factors: (1) quoted currency, (2) volume of the trade, and (3) exchange rate. These factors significantly affect trade as even a change of 1 pip can profoundly impact the value of the open position.   To calculate the value of one pip, the following formula is used: The value of 1 pip = (Pip in decimal places * Trade Volume)  
Trading position volume Calculation 1 PIP_VALUE
100,000 EUR 100,000 * 0.0001 10 USD
10,000 EUR 10,000 * 0.0001 1 USD
1,000 EUR 1,000 * 0.0001 0.1 USD
100 EUR 100 * 0.0001 0.01 USD
Example A: 1 pip volume in EUR/USD is equal to 0.0001    Example B: 1 pip volume in USD/JPY is equal to 0.01
Trading position volume Calculation 1 PIP_VALUE
100,000 USD 100,000 * 0.01 1000 JPY
10,000 USD 10,000 * 0.01 100 JPY
1,000 USD 1,000 * 0.01 10 JPY
100 USD 100 * 0.01 1 JPY
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