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  1. Beginner
    Early Stages for Beginners
    8 Topics
  2. Forex Terminology
    11 Topics
  3. Margin & Leverage
    2 Topics
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    Identifying Scams
    2 Topics
  5. Brokers for Beginners
    5 Topics
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    13 Topics
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    Using Indicators
    6 Topics
  8. Technical Analysis (Part 2)
    8 Topics
  9. Market Structure
    5 Topics
  10. Fundamental Analysis
    9 Topics
  11. Completion
    Risk Management for Beginners
    8 Topics
  12. Psychology for Beginners
    7 Topics
  13. Personal Psychology Questions
    2 Topics

PIPs and Ticks, What Exactly are They?

A PIP, not a Point, is used to describe when price moves up or down. It may sound cool to say: “Oh, price jumped up 60 points!” But in the Foreign Exchange world, the correct terminology would be: “Oh, price jumped up 60 pips!”

A pip is the smallest movement price can make. In most pairs, a pip is the fourth number after the decimal point in a currency pair. For example: If GBP/USD = 1.39110, the last “1” would be represented as a PIP. The “0” (last digit in a currency exchange rate) is actually called a tick, but we’ll talk about that immediately after this section. Pairs with the Japanese Yen only go out to two decimal places. So with USD/JPY, it’ll read something like USD/JPY = 130.220. If the last “2” goes up or down, that constitutes as one pip, whereas if the “0” goes up or down, it constitutes as a tick.

It sounds confusing, but I swear, the more you read it over and/or see real life examples, understanding what a pip is will be second nature for you.

The illustration below will help you understand how to properly count pips when looking at a regular pair.

Pips

The illustration shows that if price goes from 1.39179 to 2.39179, price jumped up 10,000 pips (which most likely will never happen) 😂

EXAMPLE: If price goes from 1.39179 to 1.49179, price jumped up 1000 pips. If the price goes from 1.39179 to 140179, price jumped up 100 pips. If the price goes from 1.39179 to 1.39279, price only jumped up 10 pips… and the same applies for a tick!

Now as far as ticks, these aren’t those annoying little bugs everybody hates! They do have their similarities; number one being that they are just as irrelevant to Forex as they are in real life! TICKS or Pipettes is the last digit in a currency exchange and are not considered important when it comes to the market because traders measure the change in currency prices via pips. Money is more so counted by the number of pips achieved, as price is barely affected by the movement of a tick.

Examples:
GBP/USD moved from 1.30250 to 1.30251 – Price moved one tick.
GBP/USD moved from 1.30250 to 1.30260 – Price moved one pip, which would be ten ticks.

NOTE: You’ll hear a trader say, price moved 100 pips today. You won’t hear a trader say, price moved 1000 ticks today! And if you do, stay away from that trader. They’re a little weird.