Sunday, April 09, 2006

What Are Pips or Points In Forex?

So, What is a Pip?

A pip or point as they are sometimes called is the smallest percentage increment listed on the currency pair.
For example, if our currency pair is trading at 1.2245 and during the day reaches 1.2250 it has moved 5 pips/points. On a standard account each pip is worth $10, on a mini account each pip is worth $1 for the USD, GBP, AUD.
For the CHF, CAD and JPY the pip values are $7.60, $7.30, and $8.45 on a standard account varying to $0.76, $0.73 and $0.85 on a mini

The Major currency pairs are;-
EUR/USD
GBP/USD
AUD/USD
USD/JPY
USD/CHF

The minor or cross currency pairs are;
EUR/GBP
EUR/JPY
GBP/JPY
EUR/CHF

There are of course many others.

I would say trade one pair first to get used to the platform and the market. The EUR/USD is the probably the most popular as it offers low bid/offer spread.

Candlesticks

As explained previously, candlestick formations can be very usefull pointers for determining the markets current state of play - as well as future movement. It really is fundamental to have at least a basic grasp of the concepts.

Fundamentals.

Bullish Candlestick (click to enlarge)




The ‘Hollow’ candlestick denotes a bullish period. These can be interpreted as a period when the market is in, or about to go into an upward movement.

Bearish Candlestick (click to enlarge)




Bearish candlesticks appear ‘Filled in’ and can be interpreted as a possible downward movement marker.

In our example below the movement between the Bearish movement and Bullish movement can be clearly seen.



Thanks for reading and happy Forex Travels.

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