Calculating PIP – What & How

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We here at the Income Mentor Box Day Trading Academy want to teach you to be the best day traders you can be. One fundamental and crucial piece of knowledge you need to be successful has to do with PIPS. You need to be familiar with the PIP, you need to know what this means, and you need to know how to calculate PIP too. Let’s take a closer look at this subject right now.

What Is A PIP?

Technically speaking, PIP stands for “percent in point” or alternatively, “price interest point”. This is a unit of measurement, or specifically a unit of change in an exchange rate or in a currency pair. In other words, a PIP signifies the difference between the price of an asset, or the difference in value in a pairing, from one point in time to another.

A PIP is most often used to measure gains or losses, and is calculated using the last decimal point in the currency pair listing. A PIP is usually measured in the equivalent of 1/100^th of 1%, or in other words, 1 PIP is usually a change in the value of the numeral which sits in the fourth spot past a decimal point. This is how you measure exactly how much money was made or lost through currency pair, Forex, trading.

 

How To Calculate PIP

Of course, if you are going to be a professional and successful day trader, you need to know how to calculate a PIPS. This is very important if you want to be a true day trader that knows that you are doing. So, calculating PIP is actually very easy.

First, let’s take a currency pair such as EUR/USD. If The price of this pairing right now is 1.0001 (it usually will not be like this, but we are keeping it simple, hence the “1.0001”). At any rate, if the value of the EUR/USD pairing then changes to 1.0011, you would have a PIPS increase of 10 PIPS.

As we noted before, one single PIP is the fourth numeral after the decimal place, ie, 1.0001. Yes, this can be a bit complicated to understand at first, but once you have calculated PIPS difference a few times, it should become fairly easy for you.

For a lesson on calculating PIPS in full, please check out the video which we have embedded here. Andrew from our Income Mentor Box Day Trading Academy does a really great job at explaining it. However, if you want a truly comprehensive lesson on the subject, it is recommended that you join our Income Mentor Box Day Trading Academy. In this lesson, you will also learn how to calculate PIPS value, or in other words, how much the PIP value change actually reflects a change in the overall price of a trade.

Calculating PIP – Final Thoughts

Folks, we haven’t covered everything here, but we have outlined the basic in terms of what PIPS are and how to calculate it. For a more in depth lesson on this particular subject, please join our Income Mentor Box Day Trading Academy! Keep in mind, we here at the Income Mentor Box Day Trading Academy also provide free Forex, CFD, stock, and indices signals for you to trade with. Just copy them into your trading platform of choice and you are good to go! We even do a monthly $500 giveaway with 3 lucky winners every single month!