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The 50 pips a day Forex strategy is an overall strategy that works in single hour intervals and aims at taking advantage of about 50% of a currency pairs’ daily movement. This type of strategy also aims at working with a select few currency pairs. These pairs include GBP/USD and EUUSD. The 50 pips a day Forex strategy is very simple in design and is considered a day trading strategy.

What is a pip?

If you are interested in Forex and read all the analysis and comments, you have probably already come across the term Pip or Pips.
The pip in Forex , and in the rest of the markets, is very common in the technical jargon of trading and a key element when it comes to operating and calculating profit and loss. The pip indicates the variation in the price of an asset.

So what is a pip in Forex? How to calculate the value of a pip in Forex? How to use pip trading?

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In this article, I will look at the following points:

• What is a pip and what is it for?
• How much is a pip worth in Forex?
• Forex pips calculator
• Examples of how to calculate the value of a pip in different assets
• How to measure pips in MetaTrader

I will also explain how fundamental this concept is in Forex, financial markets and the world of finance in general.
Let us begin!
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What is a PIP in Forex trading and what is it for?

The term Pip means percentage point. It is an incremental price movement, with a specific value that depends on the market in question. Simply put, it is a standard unit for measuring how much the price of an asset has changed.
Originally, a pip was effectively the smallest increment in which the price of a currency pair would move. The advent of other more precise methods of setting prices (with more decimal places) invalidates this definition.
Traditionally, currency prices were quoted to a specified number of decimal places (most often four decimal places), and originally a pip was a movement of one point to the last decimal place indicated.
Many brokers now add a decimal to their quotes; This implies that a pip is often no longer the last decimal in a quote.

But, as a general rule, a pip in Forex is a move to the fourth decimal place , in most currency pairs

The pip remains a standardized value for all brokers and trading platforms, so it is very useful as a measure that allows each trader to always communicate with the same terms without confusion and with ease.
In fact, it is much easier to say that a currency pair has risen by 55 pips than it is to say that it increased by 0.0055.
Without this specific unit, there would be a risk of comparing apples to oranges when speaking in generic terms, such as points or ticks.

What are points and pips in index quotes?

The pip in indices is also called the index point. In fact, unlike the Forex pip, the pip in indices does not refer to a decimal but to a unit of an index. Also, it is interesting to note that we rarely talk about a pip in indices, in the jargon of index investors we prefer to talk about "index point".
Also, although most indices are quoted to two decimal places, a pip or point means a 1.00 change in an index

How much is a Pip worth in Forex

As we have discussed, for most currency pairs, a pip is a move to the fourth decimal place. The most notable exceptions are the Forex pairs that involve the Japanese yen.
For the pairs that involve the JPY, a pip is a movement in the second decimal
The value of a Forex pip is related to the size of the contract, or volume of lots, open in the forex market. By default, the value of a pip in Forex designates the value of a pip for a contract of a standard lot, that is, for a contract with a face value of 100,000.
The value of the pip is always expressed in the counterpart currency of the currency pair, that is, the currency of the right in a parity, or the quote currency.
This is why the value of a pip in Forex for a standard lot always equals 10 of the quoted currency, except in currency pairs where the Japanese Yen is the counterpart currency, in which case the value of the pip is 1000.
The following table shows the values ​​of a pip in Forex for some common currency pairs:
But let's explain the reasoning behind these claims.
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How to calculate the value of a pip in Forex

To find out how much a pip is in Forex, you just have to do a very simple calculation to find the value of a pip for a standard lot.
Simply multiply the value of a standard contract by one Forex pip, which is 100,000 x 0.0001 for most currency pairs, and 100,000 x 0.01 for currency pairs that include JPY.
Let's imagine we want to buy 1 lot in EUR / USD:

• One lot equals 100,000 euros.
• One pip is 0.0001 for EUR / USD.
• So the value of one Forex pip for one lot is 100,000 x 0.0001 = $ 10

Example of how much a pip is worth in Forex

Let's say:

• the purchase price of EUR / USD is 1.16650
• and then you close your position at a sell price of 1.16660

How to calculate profit pips? Subtracting the sale price and the purchase price: 1.16660 - 1.16650 = 0.0001. In other words, the difference is 1 pip. So you will have won $ 10.
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You may not have a pip calculator handy , or you simply prefer not to use it.
That is why we are going to see this calculation of a pip in Forex following another procedure:
You opened your EURUSD position at 1.16650 and bought a contract. The value of this contract is 100,000 euros. In theory, you sell dollars to buy euros. The value of the dollars you sell is dictated by the exchange rate.

• 100,000 EUR x 1,16650 USD / EUR = 116,650 USD

You close your position by selling a contract at 1.16660. In theory, you sell euros and buy dollars.

• 100,000 EUR x 1,16660 USD / EUR = 116,660 USD

That means, you made a sale of $ 166,650 and got $ 166,660. That is, your profit is 10 dollars. This shows that a 1 pip move in your favor gave you a profit of 10 dollars.
In fact, this Forex pip value is consistent across all quoted currency pairs to four decimal places: a movement of one pip in the exchange rate is worth 10 units of the quoted currency (that is, the second currency) if you trade a lot (which is always 100,000 units of the base currency).
A move of 10 pips equals 100 units of the quoted currency. A move of 100 pips equals 1000 units of the quote currency, and so on.

Pip value in unlisted currencies to 4 decimal places

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The most notable currency in this case is the Japanese yen. Currency pairs that comprise the yen were traditionally quoted to two decimal places and Forex pips for these pairs are therefore governed by the second decimal place.
Let's take a look at how to calculate pips with USD / JPY.
If you sell a lot of USD / JPY, a one pip drop in price will give you a return of 1000 yen. Let's run through an example to see why.
Example of how to calculate the value of a pip in USD JPY

• Let's say you sell two lots of USD / JPY at 113,607. One lot of USD / JPY equals $ 100,000.
• So you are selling 2 x $ 100,000 = $ 200,000 to buy 2 x 100,000 x 113,607 = 22,721,400 yen.
• Now the price moves against you and you decide to cut your losses.
• It closes at 114.107. A pip for USD / JPY is a move to the second decimal place. The price has moved against you 0.50 or, what is the same, 50 pips.
• You closed your position by buying 2 lots of USD / JPY at 114.107. Buying $ 200,000 again at this exchange rate costs us 2 x 100,000 x 114.107 = JPY 22,821,400.
• This is JPY 100,000 more than the original dollar sale, so you have a JPY 100,000 loss.
• A loss of 100,000 JPY for a move of 50 pips means that for every pip you have lost 100,000 / 50 = 2,000 JPY.
• Since you made a sale of 2 lots, the pip value is 1000 JPY per lot.

If your account is open in a currency that is different from the quoted currency, this situation will affect the Forex pip value. You can learn to use our Trading Calculator to calculate the pip value.
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How to calculate the value of a pip in an Index

In the index market, the pip corresponds to one point of the index, that is, to 1
To know the value of a pip in indices, you just have to apply the same formula as to calculate the value of a pip in Forex.
Pip in indices = Pip value per contract * contract size
Many private and professional traders are passionate about the index market, but sometimes find it difficult to find the value of the index point they want to speculate on.
Example of how to calculate the value of a pip in DAX 30

• If you open a buy position on the DAX30 CFD at a price of 11,000.00 for 3.7 contracts and the point value of the DAX30 CFD is 1 EUR for 1 contract:
• 3.7 contracts x 1 EUR = 3.7 EUR
• If you close your position by selling 3.7 contracts of the DAX30 CFD at 11 035.00:
• 11,035.00 - 11,000 = 35 points
• This means that you have won:
• 35 points x 3.7 EUR = 129.5 euros
• So by buying 3.7 DAX30 CFD contracts at EUR 11,000, resold at EUR 11,035, you would have made a profit of EUR 129.5 with 35 points on the DAX30 at EUR 3.7 in your position.

How much is a Gold pip worth?

For CFDs on commodities such as Gold (XAUUSD), the quote step corresponds to the third digit after the decimal point.
Ex: for 1 CFD GOLD contract, that is, 100 ounces of gold, the value of the quote step is 0.08 EUR for a variation of 0.001. So if gold (XAUUSD) goes from $ 1947.60 to $ 1947.70, your trading account will show a profit or loss of 8 EUR.
Important: As you can see in the example above, a small fluctuation in gold has a big impact on the capital of your account. Also, when trading an asset like gold, you need to be more vigilant and limit risks. Commodity CFD contracts are instruments with high volatility (fluctuation).
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How to calculate pips on MT4

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The following image shows a chart of an order for GBP / USD in MetaTrader 4:
The quote shown in the image is 1.29969 / 1.29978. We can see that the figures in the last decimal are smaller than the other numbers. This is to show that these are fractional points.
The difference between the buy price and the sell price is 0.9 pips. If you bought and sold instantly at this price, the pip value would be 0.9 and you would have a loss of $ 9.

Tips for calculating the value of a Pip

For any trading account opened with Admiral Markets, you have access to MetaTrader's exclusive Supreme Edition trading platform.
On both MT4 and MT5 you can benefit from the Mini Terminal Expert Advisor.
In this latest version, the Mini Terminal has an extension that offers more functions, such as how to know how much a pip is worth on any asset.
This little trick is simple and will only take you a few seconds to calculate. You can find the value of a pip for the number of lots you choose (0.01; 0.1; 1; 2; 3 ...) in:

1. The euro dollar - EURUSD
2. The Spanish Stock Index - CFD IBEX 35
3. The German Stock Index - CFD DAX 30
4. Gold - CFD Gold
5. Oil - CFD WTI
6. Cryptocurrencies - BTCUSD CFD

Suppose you want to open a GBPUSD trade. You have to think about protecting yourself, that is why you use a Stop Loss.
You decide to place the stop loss at a distance of 10 pips.
But, how can we know the amount of lots we need so that these 10 pips represent an acceptable amount, depending on your capital and your profile as a trader?
This is where the Mini Terminal comes in! This tool is designed to solve this complex calculation in just a few seconds. It is very simple, you can:

• Choose based on a percentage of your own funds
• Choose based on a percentage of your account balance
• Choose based on a fixed amount of euros

Therefore, a risk of € 50 for a Stop Loss of 10 pips corresponds to 0.55 lots, the value of the pip per lot being 9.02 euros (the equivalent of 10 dollars) according to the Mini Terminal.
Knowing the value of the pip, depending on the number of lots and the asset is essential for a good management of your capital.

Relationship between Pip and Forex Spread

In the Forex market, as in the stock market in general, the spread is the difference between the buy price and the sell price, bid and ask.
The difference between the buy price and the sell price is measured in pips or points. The spread exists on all underlying assets.
Example Relationship between Pip and Spread in EURUSD
If the EUR / USD exchange rate is 1.12340 / 1.12350, the difference between supply and demand is 0.0001. This means that the spread is 1 pip or 1 point.

What are Pips in the Stock Market

If you are interested in trading stocks, you may be wondering if there is such a thing as the stock pip.
In reality, pips are not used when it comes to trading stocks, as there are pre-set terms for communicating price changes: specifically, pennies and cents.
For example, the following image shows an order ticket for IBM:
https://preview.redd.it/0wkbi7127vn71.png?width=720&format=png&auto=webp&s=769f344e0827c5292b927fce25154975a52d172f
The whole numbers in the quote represent the price in USD and the decimal numbers represent pennies.
Therefore, it is not necessary to enter an additional term, such as pips, although sometimes market jargon may include the generic term tick to represent a movement of the smallest possible increase, in this case, a penny.

How to measure a candle in Pips in MetaTrader

To measure the pips of a candle in MetaTrader 5 you have to press the cross in the shortcuts at the top of the trading platform.
To measure the size of the candle you only need:

• Position yourself on the top or bottom of the candle in question.
• Click the left button of your mouse.
• Hold down the left button.
• Go to the bottom or top of the candle.
• Read the information displayed on the right side of the cross icon.

It should be mentioned that:

• The first information on the left represents the price where the cross icon is currently located.
• The second shows us the number of candles.
• The third indicates the number of points or pips, that is, how much the Japanese candle measures
• Finally, the percentage of price variation appears.

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What is a pip - Reddit Conclusion

Being familiar with the exchange rate unit of measurement is an essential first step in becoming a competent trader. I hope this article has given you a solid foundation on what a pip is and how important it is in trading.
Regardless of what you want to trade, be it CFDs on Forex or stocks, you want to use the best trading platform available. This is why we advise you to use the MT5 Supreme Edition
This is why you should try the MetaTrader Supreme Edition plugin. It is a cutting edge plugin for the MetaTrader platform, it offers a much wider selection of indicators and trading tools than the standard version.
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A pip is the unit of measure assigned in decimal points to the value of a currency. The 50 pips a day Forex strategy is an overall strategy that works in single hour intervals and aims at taking advantage of about 50% of a currency pairs’ daily movement. This type of strategy also aims at working with a select few currency pairs. These pairs include GBP/USD and EUUSD.