Why is Pip important?
Knowing pip value is gaining importance especially in leveraged market conditions. Changes in the asset price may result in larger movements in capital compared to non-leveraged market conditions. For this reason, knowing the value of pip comes to the fore with its many functions and profit and risk calculation.
توصيات ذهبFor example, let's say that the dollar exchange rate is at the level of 2,9400 and we get 1000 dollars from the exchange office. 2940 Turkish Lira after the transaction, the dollar will reach 2,9500'e. When you cash in the dollar, you will receive 10 Turkish Lira for 100 pips. In short, 0,10 Turkish Lira for one pip. When you do the same in the Forex market, we can see the importance of the pip concept. Let's assume that we have the same transaction in the Forex market with 1/100 leverage with the same capital. While the dollar is at the level of 2,9400, we are now able to trade with 2940 Turkish Liras in our pocket. Therefore, the exchange rate of 2,9500 will make our profit to be 1000 Turkish Lira. This means 10 Turkish Lira per pip. The same conditions may cause damage to your process by developing in the opposite way. However, with the appropriate risk management rules, you can keep your losses to a minimum.
افضل شركه فوركسCalculation of Pip Value
Pip is standardized according to the traded currency pair. For example, quotations in exchange rates are represented by four decimal places in the form ir a.bcdef “and one pip is equal to 0.0001. In this case, the quotation sensitivity is 1 / 10,000. Since the slightest difference in the quotation is 0.0001, 1 pip is 0.0001 of the base currency. The only exception to the exchange rates is the yen-based parities. In Yen based parities, only two decimal places are displayed and the quotation value is calculated as 0.01, so the quotation accuracy is 1/100.
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