A pip which is generally known as a percentage in point is one of the most recognized terms in the world of financial trading. This represents the smallest incremental movement in the price of the value of an instrument. Depending on the instrument which is being traded the pip location varies. In Forex trading and to use the USD which is the most quoted currency within the markets the pip is located to the 4th decimal place $0.0001.
Each move which take places in USD related currency pairs will be the equivalent of the following. If the market moves from $0.0001 to $0.0002 that will be a 1 pip move. To $0.0010 will be a 10 pip move. $0.0100 will be a 100 pip move and so on.
Below we look at how the pip can be found on the trading platform and its general uses.
How is a pip used?
The pip is the main metric traders use in calculating their profit or losses. The pip number also helps a trader outline the cost of the trade prior to entering the market.
On your trading platform you will usually have a market watch which shows you the various markets being traded. On the market watch you will see the prices being quoted, and will notice at latter numbers are usually the pips.
Best Brokers for Tight Pip Spreads
The best brokers for tight pip spreads are usually those who allow scalping, have a range of liquidity providers, good execution speeds and generally reliable. Trading volatile markets can be risky and expensive, so brokers would need to offer the above and more, to help ease your mind when trading with them at the best cost.
Here is our list of the best brokers for breakout trading: