The alphabetic code which represents the national currency of the United Arab Emirates; the UAE Dirham.

The alphabetic code which represents the national currency of Albania; the Lek.

A technical analysis line study developed by Dr Alan Andrews.

The alphabetic code which represents the national currency of Curaçao and Sint Maarten (Dutch part); the Netherlands Antillean Guilder.

The alphabetic code which represents the national currency of Panama; the Panamanian Balboa.

The alphabetic code which represents the national currency of Bangladesh; the Bangladeshi Taka.

A technical analysis indicator derived from Bollinger Bands.

A price chart pattern where a downward move (downtrend or correction) is interrupted by an upward move as buyers exceed sellers..

The alphabetic code which represents the currency of Bolivia; the Mvdol.

The alphabetic code which represents the national currency of Bhutan; the Bhutanese Ngultrum.

A market where transactions and delivery of assets are settled immediately after the trade..

The alphabetic code which represents the national currency of the Democratic Republic of Congo, the Congolese Franc.

The alphabetic code which represents the national currency of Switzerland; the Swiss Franc.

The alphabetic code which represents the national currency of the People’s Republic of China; the Chinese Yuan Renminbi.

A legal entity that enforces rules and procedures for trading commodity contracts.

The alphabetic code which represents the national currency of Bosnia and Herzegovina; the Bosnian Convertible Mark.

A term used to refer to a temporary price move in the opposite direction only to resume in the direction of the trend..

A Japanese candlestick formation consisting of three candles.

Developed by Ralph Nelson Elliott in the 1930s, this technical analysis technique uses wave theory to predict possible price behavior.

A Japanese candlestick pattern signaling a possible bearish reversal.

A Japanese candlestick pattern signaling a possible bullish reversal.

An online account used to connect individual's personal banking and cryptocurrencies.

The FOMC holds eight regular meetings throughout the year to discuss financial conditions and issues statements in regard to its monetary policy decisions..

A fractal indicator is a technical tool developed by Bill Williams.

A technical analysis tool Developed by W.

A technical analysis tool developed by W.

A Japanese candlestick pattern signalling a possible bullish reversal.

A free-float capitalization weighted index consisting of 50 blue-chip stocks.

In technical analysis, it is a mathematical/statistical tool to identify the direction of the market, its momentum and extreme levels..

The alphabetic code which represents the national currency of Japan; the Japanese yen.

The alphabetic code which represents the national currency of Sierra Leone; the Leone.

A technical indicator, and more specifically a moving average method, which puts more weight on the most recent prices.

A Japanese candlestick bullish reversal pattern formed during a downtrend.

The alphabetic code which represents the national currency of Poland; the Zloty.

The alphabetic code which represents the national currency of Botswana; the Pula.

A systematic methodology to trade the financial markets.

A Japanese candlestick pattern signaling a possible continuation to the upside.

So, according to PIPSZONETrades ’s ultimate **glossary** for traders, “**trend**” is basically the direction of the market; up, down, or sideways.

Additionally, it is identified by looking at tops and bottoms. For example, in an uptrend, we see successive higher tops and higher bottoms, for a downtrend, successive lower tops and lower bottoms, and for a sideways market, successive equal tops and bottoms.

Okay, but now we have two new unknown words… Tops and bottoms!

Let’s explain this better.

Imagine a price chart where the prices are rising. Beautiful right?

To be precise, rising prices do not move in a straight line, but instead, they follow a zigzag path.

So, they move upwards then pull back a bit, and then move higher to continue this pattern.

“**Top**” is the highest price reached before prices pull back, while “**bottom**” is the lowest price reached before moving higher again.
Simple!

To put everything together, an uptrend is at least two consecutive higher tops and higher bottoms.

Similarly, a downtrend is defined as at least two lower tops and lower bottoms, and in a sideways market, at least two equal tops and bottoms.

Now, let’s move on to the uptrend! 


What is “Trend”? | PIPSZONETrades Learn

So, according to PIPSZONETrades ’s ultimate glossary for traders, “trend” is basically the direction of the market; up, down, or sideways.

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What is “Trend”?

Yep, you read that right!

We put together the 5 basic steps you need to enter the trading world, whilst providing you with special tips for the ultimate trading experience.

Let’s dive in!

#### 1. Got a smartphone?
With today’s technology at our fingertips, anyone can trade. Literally, the very first thing you need is a smart device. You’re probably reading this article on one, such as your phone or laptop!

#### 2. Education is King
So, you got your smartphone/laptop ready, you got a pretty good WiFi connection too. What’s next? Well, learning the basics before you “jump right in” the trading boat would be the wise thing to do. PIPSZONETrades for instance has an extraordinary rich pool of educational content such as videos, webinars, seminars, workshops, e-books etc. 

#### 3. Choosing your Broker
Usually, traders pick a broker based on certain criteria, such as its customer support, software, community, educational material etc. Fun fact, at PIPSZONETrades we offer all of this stuff and more ;) 

Anyway, you should be able to choose a broker that offers you everything you need, not only in terms of quantity but, most importantly quality. After all, the first thing you should invest in is yourself and your knowledge. 

#### 4. No Emotions Allowed here!
We know the title sounds a bit harsh at first, but hear us out! The ability to control your emotions can work wonders when trading. It’s very important to “keep it together” and be focused when trading. Don’t let your ego take over your decisions!

#### 5. What’s the plan?
So you did your research, watched educational videos, went through some e-books, bla bla bla. What happens next? Well, this is where you put everything you learned into “action”.

Check out our next article to find out how to buy, sell, secure potential profit, and protect your funds as much as possible!

How to Start Trading in 5 Steps | PIPSZONETrades Learn

Yep, you read that right!  We put together the 5 basic steps you need to enter the trading world, whilst providing you with special tips for the ultimate trading experience.

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How to Start Trading in 5 Steps

Now that we understand the concept of what a trend is, let’s take it one step further, shall we?

Remember that “**uptrend**” is defined as the direction of successive higher tops and higher bottoms and looks like a zigzag on the price chart? Great!

Now the question is, what is the minimum number of tops and bottoms needed to define an uptrend?

Well, the answer comes from Charles Dow himself: two successively higher tops and two successively higher bottoms.

So, similarly to Newton’s First Law of Motion, an object in motion will continue to move in the same direction until there is an opposing force acting upon it. Therefore, an uptrend will continue to move higher and higher until it reverses.

Is it guaranteed 100% that an uptrend will continue to move higher and higher?

Eh, not really. But it’s more likely to move higher than to reverse.

So, what is the more sensible thing to do during an uptrend?

If you thought of “buy”, then we’re with you!

Since the uptrend will most likely continue to move higher, a “sell” move wouldn’t be the wisest thing to do.

Ready to move on to the downtrend?
Let’s go!

What’s an “Uptrend”? | PIPSZONETrades Learn

Now that we understand the concept of what a trend is, let’s take it one step further, shall we?

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What’s an “Uptrend”?

So, we’ve looked at Trend and Uptrend, but what about the **Downtrend**?

Similarly to the uptrend, the downtrend direction looks like a downwards zigzag path.

Now the question is, what is the minimum number of tops and bottoms needed to define a downtrend?

Well, the downtrend is defined by two successively lower tops and successively lower bottoms.
 
The keyword here is “successively” because a downtrend is more likely to continue to move lower and lower until it reverses.
 
Basically, it’s like the water in a river flowing downstream. It’s more likely to keep moving towards a downwards direction, right?

Perfect!

Now, we can place a sell trade to take advantage of this!

What’s a “Downtrend”? | PIPSZONETrades Learn

So, we’ve looked at Trend and Uptrend, but what about the Downtrend?

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What’s a “Downtrend”?

Once upon a time, like, 30 years ago more or less, the only people who had access to trading the stock market were really rich investors, large financial companies, hedge funds etc.

Very simply put, only the “big guys” were allowed in the “trading playground”, while the rest sat there and watched. Well, not anymore!

Thanks to the massive evolution of technology and finance, we now have online trading with either very low commissions or no commissions at all, giving the rest of the world the “green light” into the “trading playground”.

So, today, if you have a smartphone (and you probably do!) you can enter the trading world with a simple “touch”! 

But what is trading exactly?

Well, trading has many different sectors. We have forex, which is the exchange of currencies, we have stocks which are the buying and selling of company shares, we have cryptocurrencies (you probably heard of bitcoin, ethereum etc), and so much more!

But this is just the tip of the iceberg… We’re only getting started!

Keep reading to find out more about the fascinating world of trading the financial markets!

What is Trading? | PIPSZONETrades Learn

Once upon a time, like, 30 years ago more or less, the only people who had access to trading the stock market were really rich investors, large financial companies, hedge funds etc.

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What is Trading?

Okay, so you’re probably wondering how one can trade the financial markets. Well, you’ve come to the right place because we have all the answers!

Very simply put, when trading you gotta “buy low” and “sell high”.

**Let us give you an example!**

Let’s say you would like to buy Apple shares, and they’re currently at $10. So, after you buy shares worth $10, you wait for the shares to go up to let’s say $50. Now, if you sell it for $50, it means you’ve just made a $40 profit!

But when is the best time to buy? Now that’s where the “follow the trend” comes into the picture. We’ll tell you more about this in the next article.

**Now, what happens when the price goes down rather than going up? **

So, even though you bought $10 shares of Apple, it went down to $5. Well, in this unfortunate scenario you need to “get out” with the smallest possible loss. So, don’t wait for it to go all the way down to sell it.

Of course, you’ll hear us saying this pretty much all the time, use a protective stop loss! This way, even if you lose, the damage can be somewhat “tolerable”. Remember, trading is not always full of rainbows and unicorns, it also comes with risks! 

Additionally, you also need a good trading strategy. Don’t worry though, you can practice on a demo account until you’re comfortable experiencing the “real deal” with real money. (We don’t mean to brag, but PIPSZONETrades ’s one is pretty awesome!)
In the meantime, we can give you tips and tricks that will hopefully help you evolve!

Welcome to the trading world!

How to Trade the Financial Markets | PIPSZONETrades Learn

Okay, so you’re probably wondering how one can trade the financial markets. Well, you’ve come to the right place because we have all the answers!

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How to Trade the Financial Markets

So, we talked about the uptrend and the downtrend, but the trading magic doesn’t stop there!

Besides that, the market may be also following a sideways direction which is also known as trendless, range or flat market.

Fun fact, a sideways market may be viewed as “a wait and see” phase. 

This is basically when traders wait for some important events to happen before they carry on trading. For example, the release of important economic news or maybe a company’s announcements.

Another reason for a trendless market is the lack of interest by the traders and as a result, not only there is no direction but also the market is characterized by low volume.

Nevertheless, during a range, prices are confined between two boundaries, zones, or lines; the upper line and the lower line.
Remember that to draw a straight line, we need two points.

So, in our example, a minimum of two tops and two bottoms are needed.

![6.1.png](https://s3.eu-west-1.amazonaws.com/blog.PIPSZONETRADES.com-storage/6_1_921b6175a1.png)

The lower boundary acts as a support to the falling prices, whereas the upper boundary acts as a resistance to the rising prices.
So, after the prices reach the upper boundary what do you think will happen next?

Well, they may rebound back to the lower boundary, and when prices reach the support area prices may bounce up to the upper boundary.

Now if that isn’t cool, we dunno what is!

What’s the “sideways” direction? | PIPSZONETrades Learn

So, we talked about the uptrend and the downtrend, but the trading magic doesn’t stop there!

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What’s the “sideways” direction?

Get your A,B,Cs of trading in a series of lessons on PIPSZONETrades Learn's introduction. Take the first step now and see where your trading journey takes you.

Introduction (The A,B,Cs of Trading) | PIPSZONETrades Learn

Introduction

(The A,B,Cs of Trading)

Ever wondered how big the forex market is? You might be shocked!
The foreign exchange market is actually the largest one in the world (yes, bigger than the stock market!) with a daily volume of $6.3 trillion according to a 2019 study.

If you want to visualise the size, let us just tell you that if you have a tower made of $6.3 trillion, it would be 3+ times taller than the Statue of Liberty in the US! Impressive, no?

Now you might be wondering, since forex is all about currencies, which were the most traded currencies of the year? Well, we got you covered! Check out the top 10 traded currency pairs.

![5.1.png](https://s3.eu-west-1.amazonaws.com/blog.PIPSZONETRADES.com-storage/5_1_c0fe8b1379.png)

Nevertheless, the foreign exchange market seems to be growing fast over time, as it grew even more over the years.

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This could mean that the forex future is even more promising!

How Big is the Forex market? | PIPSZONETrades Learn

Ever wondered how big the forex market is? You might be shocked! The foreign exchange market is actually the largest one in the world (yes, bigger than the stock market!) with a daily volume of $6.3 trillion according to a 2019 study.

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How Big is the Forex market?

So far, we looked at what trading is, the basics of how to do it, as well as the main objectives of the industry. But one question remains unanswered: when should you trade? 

Well, we previously mentioned that the forex market is open 24/5, but before choosing the “right time” to trade, we first need to have a look at the trading sessions in general.

There are four main trading sessions in forex, and they consist of the Sydney session, the Tokyo session, the London session, and the New York session. Traders usually like to focus on the high activity trading sessions, rather than trade 24 hours a day.

Now, the market, besides weekends, is also closed on Christmas Day, and New Year’s. Everyone deserves some holidays, after all, even the markets!

Let’s have a look at the open and close times for each session.

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The open and close times of each location are usually based on their local business hours, so their trading day begins between 7 and 9 AM local time.

#### Overlapping
You might have noticed that some trading sessions seem to overlap. What does this mean?

Well, some traders tend to start trading during that overlap, because that’s when there’s a lot of movement going on in the market.

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Now you know the forex trading sessions!


The Four Forex Trading Sessions | PIPSZONETrades Learn

So far, we looked at what trading is, the basics of how to do it, as well as the main objectives of the industry. But one question remains unanswered: when should you trade? 

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The Four Forex Trading Sessions

So, in our previous article, we had a look at the popular currency pairs (the Majors), as well as their main characteristics and nicknames.
 
We didn’t point out, however, a very significant similarity between those pairs. 

They were all linked with the US Dollar! 

Yeah, this kinda makes sense since the US Dollar is like the “Prom Queen” of currencies, but what about other currency pairs?

Well, let’s explore two more groups of currencies; the Crosses and the Exotics.

#### The Crosses
The Crosses basically don’t have the US Dollar as one of the two currencies, and they are more volatile compared to the Majors with wider price movements. Crosses can be also more expensive to trade compared to the Majors.

Some examples of Crosses, are:
- EURGBP (Euro - British Pound)
- GBPJPY (British Pound - Japanese Yen)
- AUDNZD (Australian Dollar - New Zealand Dollar)
- EURCHF (Euro - Swiss Franc)

#### The Exotics
Now, let’s move on to the Exotics. This category consists of one of the Major currencies and a currency of a developing economy, such as:
- EURZAR (Euro - South African Rand)
- USDMXN (US Dollar - Mexican Peso)
- GBPHUF (British Pound - Hungarian Forint)
- USDTRY (US Dollar - Turkish Lira)
 
Interestingly, Exotics are more volatile, and thus riskier to trade. So the cost of trading is higher compared to the Majors and the Crosses. Of course, as they say, the higher the risk, the higher the return.

But nonetheless, you should trade sensibly, carefully and always protect your capital!

What are Crosses and Exotics? | PIPSZONETrades Learn

So, in our previous article, we had a look at the popular currency pairs (the Majors), as well as their main characteristics and nicknames.

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What are Crosses and Exotics?

In our previous article, we talked about the Euro and US Dollar, and how they’re the main characters of the forex world. There are, however, some other currency pairs that are just as popular, and they’re known as the Majors.

Let’s have a look, shall we?
- USDJPY, also known as US Dollar - Japanese Yen. 
- GBPUSD, which is the British Pound (or Pound Sterling) VS the US Dollar
- AUDUSD, meaning the Australian Dollar VS the US Dollar
- USDCAD, which is the US Dollar VS the Canadian Dollar
- NZDUSD, which is the New Zealand Dollar VS the US Dollar
- USDCHF, the US Dollar vs the Swiss Franc

These currency buddies though, also share some characteristics, such as:
- They are very liquid, meaning that you can buy big amounts any time of the day.
- The cost of trading the Majors is relatively low compared to other currency pairs.
- They are not very volatile, which means that sharp price swings are not very common for their exchange rate.

**Fun fact:** Did you know that the Majors also have their own nicknames?

For example, the EURUSD is known as Fiber, and the USDJPY is known as the Ninja. Also, the USDCAD is called Loonie, which originates from a bird in Canada that looks like a duck, called a Loon. 

Moving on, the AUDUSD is also known as Aussie (that’s pretty straightforward though, right?).

Additionally, the GBPUSD is called cable, because of the cable in the Atlantic Ocean that was used to connect London and New York for telecommunication purposes.

Last but not least, the NZDUSD is known as “Kiwi”, which although one might think it comes from the fruit, it’s actually a popular featherless bird!

Now you know the popular currency pairs!

Which are the Popular Currency Pairs? | PIPSZONETrades Learn

In our previous article, we talked about the Euro and US Dollar, and how they’re the main characters of the forex world. There are, however, some other currency pairs that are just as popular, and they’re known as the Majors.

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Which are the Popular Currency Pairs?

Our motto at PIPSZONETrades Education is “Invest in yourself before investing in the markets”.

The reason behind this is that not many people understand how important education is in the trading industry. 

Forex is usually glamorized on the internet and the media in general. After all, it is the biggest market in the world!

Especially on social media, we see investors driving fancy cars, living a luxurious life with yachts and money, and jets, you name it.

Of course, there is risk involved like any other investment activity, but don’t get discouraged! Besides, you wouldn’t start flying a plane without having a pilot’s license, right? Similarly, you shouldn’t jump into trading without knowing a thing or two! 

This is where we come in.

In our next series of articles, we’ll be looking at the basic forex terminology, explaining everything you need to know step by step.

All aboard? 

Let’s go!

The biggest market in the world | PIPSZONETrades Learn

Our motto at PIPSZONETrades Education is “Invest in yourself before investing in the markets”.

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The biggest market in the world

You might have noticed a hype lately around words like “**forex**”, “**trading**”, “**bitcoin**”, and so on. But what does forex even mean, and what’s the hype all about?

Well, in simple words, Forex means “*Foreign Exchange*”, which is basically currency exchange. 

Now, foreign exchange is the ability to trade one currency for another. Let’s say you’re living in a European country that uses the Euro as currency, but you wanna travel to the US for holidays. In this case, the only way to actually pay for stuff in the US is by doing so in US dollars. So, you have to exchange your Euro for USD.

Now, maybe you noticed that since we are headed towards a cashless economy, when you pay via card or your phone, this “exchange” is done automatically. How cool is that?

There’s some basic stuff you should know about forex though, especially if you’re considering it as a “trading” option.
Let’s go!

#### 1. We trade currency pairs
So, in forex, we trade currency pairs. For example, one of the most popular currency pairs is the EUR/USD, as it represents two of the biggest economies of the world. Other popular currency pairs are: the British Pound or Pound Sterling (GBP) VS the US Dollar (USD), the Australian Dollar (AUD) VS the US Dollar (USD), and a couple more that we’ll be reviewing in our next article!

#### 2. We use forex (literally) all the time
We actually “trade” forex more than we think. Every time you buy something online from a country with a different currency, you’re exchanging one currency for the other.

Additionally, many companies pay their overseas employees in their local currency. So, they need to exchange money from one currency to another for payroll purposes!

#### 3. It's kind of a big deal
Foreign exchange is very important for cross-border trade, investments, and transactions in general. Additionally, traders want to benefit from the “ups and downs” of prices, by “buying low”, and “selling high”, just like any other trade! You buy an item at a certain price to sell it higher for a profit.

#### 4. Liquidity 
What’s really cool about trading forex is its liquidity. This is basically the ability to buy and sell a currency pair, almost anytime. What this means is that high liquidity in a financial market allows for faster transaction flow and more competitive pricing.

#### 5. Bidirectional trading
In trading the motto is usually “buy low, sell high”. What we mean by this is that if the market is going up (ie uptrend), you could buy or “go long”, to benefit from the rally/trend. Similarly, if the market is going down (ie downtrend) you can sell or “go short”, in order to benefit from the decline. 

This is an advantage of forex trading, as “shorting” is not available in all financial markets (i.e. stock market, cryptocurrencies).

#### 6. Leverage
Leverage is a pretty cool financial tool that allows traders to control more capital than what they originally deposited. Now, the interesting part is that any potential profit will be multiplied for the trader, but so will the risk and loss. So although this tool can be pretty handy, you need to use it very wisely!

#### 7. Open 24/5
Last but not least, another cool thing about the forex market is that it's open 24 hours a day, five days a week, from Monday to Friday. So, basically, you can trade pretty much anytime you want during the weekday!

Why trade Forex? | PIPSZONETrades Learn

You might have noticed a hype lately around words like “forex”, “trading”, “bitcoin”, and so on. But what does forex even mean, and what’s the hype all about?

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Why trade Forex?

Learn everything about the biggest market on Forex Basics. How big is it, what are the main currency pairs, and more. Start learning today on PIPSZONETrades Learn. 

The biggest market in the world - Forex Basics | PIPSZONETrades Learn

(Forex Basics)

At the beginning of this fascinating trading journey, we said that we wanna teach you everything you need to know in order to enrich your trading knowledge.

Well, sure thing we like to keep our promises!

In this next chapter we will be looking at some really important trading terms, that even though they might not seem as significant right now, we promise you they’ll come in handy.

At the end of the day, how will you be able to invest your money and time, if you don’t invest in knowledge first?

This is exactly why we want to take you through everything step by step, term by term. So, take notes, everyone, because we’re about to enter a whole new trading world very shortly!

Here’s what we will be learning in yet another awesome module!

- What’s Base and Quote currency?
- What’s Bid and Ask price?
- What does PIP mean?
- What’s a Lot?
- How do we calculate the value of a PIP?

All these questions will be answered in our next series of articles!

Let’s go!


Why learn so many trading terms? | PIPSZONETrades Learn

At the beginning of this fascinating trading journey, we said that we wanna teach you everything you need to know in order to enrich your trading knowledge.

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Why learn so many trading terms?

You’ve been doing an amazing job so far learning about the fantastic world of forex! 
Last time we had a look at currency pairs, but we wanna take it a step further. So, let’s move on to a couple more terms, shall we?

#### The BASE-ics
The first currency in a pair is called the base currency, and the second one is called the quote, or counter currency.

So, when we talk about the exchange rate of a currency pair, we actually mean how many units of the quote currency are needed to buy one unit of the base currency. Confused? Let us give you an example.

Let’s say the exchange rate of the EUR/USD is 1.2200. What does that mean? Well, very simply put, it means that 1.22 US Dollars are needed to buy 1 Euro.

Here’s another example: what if the exchange rate of AUD/USD is 0.79? Again, this means that 0.79 of a US Dollar is needed to buy 1 Australian Dollar! Excellent!

Now you know what the Base and Quote currency is!


What’s the Base and Quote Currency? | PIPSZONETrades Learn

You’ve been doing an amazing job so far learning about the fantastic world of forex!  Last time we had a look at currency pairs, but we wanna take it a step further. So, let’s move on to a couple more terms, shall we?

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What’s the Base and Quote Currency?

If a lot is 100K of the base currency, how much is the value of a pip?

Well, let’s learn how to calculate our profit! Fine, profit and loss...

So we looked at the chart for example, and we spotted a pretty cool reversal, so we decided to buy 1 lot of EUR/USD. Our profit target was reached, and we managed to close the trade with a profit of 150 pips! Woohoo!

But how much is that in dollars? Well, the formula is simple:

We know that 1 lot means 100K and also made 150 pips profit. But the trick here is to write the pips in decimal notation. Remember that in most currency pairs the pip corresponds to the 4th digit after the decimal point. 

The exception would be the Japanese Yen and the Hungarian Forint which corresponds to the 2nd digit after the decimal point.

So,150 pips in decimal notation would be 0.0150.

Check out the table here to get a better understanding.

![5.1 Table.png](https://s3.eu-west-1.amazonaws.com/blog.PIPSZONETRADES.com-storage/5_1_Table_1655deb566.png)

Now, to calculate the profit in the quote currency, meaning, the US Dollar we simply multiply by 100,000.

**100,000 x 0.0150 = $1,500.**

That’s your profit!

Let’s take a look at another example, shall we? 

This time we entered the market with 0.5 lots and made a profit of 80 pips. Not bad. Right?

Now let’s calculate our profit in the quote currency, in US dollars.

**So, 50,000 x 0.0080 = $400!**

Awesome!

What if we lose though? How do we calculate our loss?

Well, let’s say that after buying 1 lot of USD/JPY we, unfortunately, exited the trade with a loss of 50 pips.

In this case, the loss in the quote currency, the Japanese Yen, would be:

**100,000 x 0.500 = ¥50,000. **

Now you know how to calculate both your profit and loss!


What’s the Value of a PIP? | PIPSZONETrades Learn

If a lot is 100K of the base currency, how much is the value of a pip? Well, let’s learn how to calculate our profit! Fine, profit and loss...

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What’s the Value of a PIP?

When you first hear it, it reminds you of a funny sound, doesn’t it? “PIP!”
In the trading world, however, weirdly enough, it doesn’t only mean something, but it’s also pretty important!

Specifically, pip stands for: 
- Percentage in point 
- Point in percentage
- Price interest point

Not clear enough eh? 

Well then, in simpler words, a pip is a measure of the exchange rate’s movements, meaning it measures the change/difference of the exchange rate! In other words, it measures the up and down movements of the price. 
Interestingly, traders often measure their profit and loss in pips. So, you might hear a trader sometimes be like “I made 50 pips!” or something like that. 

Now, let’s have a look at a better example of what a pip actually is.

So, the exchange rate of the EUR/USD is quoted in 5 decimal digits.

But let’s say that the exchange rate moved from 1.20100 to 1.20190. 

This means that it gained 9 pips!

In simple words? the pip corresponds to the 4th digit after the decimal point, and this is the case with almost all currency pairs.
The exception is the Japanese yen, which is measured in 3 decimal places.

For example, if the exchange rate of the USD/JPY is 115.000, and it moves to 115.080, then it simply gained 8 pips. 
In this case, the pip here corresponds to the second digit after the decimal point.

Fun fact, this is also true for the currency pairs that involve the Hungarian Forint!

You now know what the pip is and how it’s measured!

What is a PIP? | PIPSZONETrades Learn

When you first hear it, it reminds you of a funny sound, doesn’t it? “PIP!” In the trading world, however, weirdly enough, it doesn’t only mean something, but it’s also pretty important!

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What is a PIP?

Okay, the title of this article can be a bit confusing, so allow us to clarify!
When we say a “**lot**” in the trading world, we mean the size of the order/trade.

For example, we would measure orders like this: 1 lot, 2 lots, 5 lots etc, or even a fraction like: 1.1 lots, 1.5 lots and so on.

So, basically, when we start placing buy/sell orders on some trading platforms, it’s how we measure that order’s size.

Now you might be wondering, how much is **1 lot**? Well, do you remember when we previously talked about the base and the quote currency?

Basically, the first currency in a pair, the left-most currency is the base currency, and the second currency in a pair is the quote or counter currency.

So, when we place an order to buy 1 lot of EUR/USD for example, it means that we’re actually buying 100K Euro. 

Now, if we sell 1 lot EUR/USD then we’re selling 100K Euro. Whenever we buy or sell a currency pair, in reality, we buy/sell the base currency.

Traditionally, when we refer to a “lot” we mean a standard lot that is equal to 100K units of the base currency. Similarly, a “mini lot” is equal to 10K units of the base currency, and a “micro lot” corresponds to 1000 units of the base currency.

Now you know how much is a lot!

What’s a Lot? | PIPSZONETrades Learn

Okay, the title of this article can be a bit confusing, so allow us to clarify! When we say a “lot” in the trading world, we mean the size of the order/trade.

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What’s a Lot?

All the Forex basics to start trading currencies. Bid/Ask Price, Pips, Lots, Base/Quote, and more. Enter PIPSZONETrades Learn and grow your trading knowledge!

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