Understanding forex pips – pips is what forex trader use to measure their profitability


Forex traders measure their wins and losses in pips (or price in percentage).  Number of pips multiply by trading size is your profit/loss in monetary value. Tflow® students always share their profit/loss in pips and not monetary value. In fact, personally I will question if anyone shares their profitability in dollar and cents. Would you tell anybody your salary, your net worth or how much money you have in your bank?


There might be a lot of confusion as it stand for:

  • Point In Percentage
  • Percentage in Point
  • Price Interest Point

To figure what is the right answer does not really help us instead it wasting our time. All we need to know is that a pip is the unit of measurement for currency.

  • Certain brokers offer fractional pips to be more competitive in their price quote.
Understand Forex Pips
  • For JPY pairs, pip measured will be the second decimal.
  • For other pairs such as USD or minor crosses, pip measured will the fourth decimal place.

Tip: due to fractional pip, it is easier to just use your finger to cover the fifth decimal (in non-JPY crosses) and the second decimal (in JPY crosses) to read quotes.

Forex Fluctuate

Lets use USD/CHF as another example:

  • Bid= 0.97223
  • Ask = 0.97239

The last digit also known as fractional pip. The fourth digit will be relevant to us in this case. Spread between bid and ask price will be 3.9 – 2.3 = 1.6 pip

What do these individuals decimals stand for?

Understanding Forex Pips

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