A pip is a unit of measurement used in foreign exchange trading. A pip measures the change in value between two currencies. The most common use of pips is to measure the profit or loss a trader makes on a trade. Most currency pairs are quoted to four decimal places, so a one-pip move is equal to 0.0001 or 1/100th of one percent.
Traders use 60pips as a way to measure their gains and losses on trades, because it’s easier than calculating percentages when there are small moves in the market price. For example, if you buy EURUSD at 1.1050 and sell it at 1.1051, you’ve made one pip worth of profit (0.0001). If you lose money on the trade instead, your loss would be -1 pip (-0.0001).
Pips can also be important for determining how much margin (or collateral) you need to open a position with your brokerages account.. Margin requirements vary by broker but usually start around 2% of the total position value for major currency pairs like EURUSD or USDJPY . So if your brokerage requires 2% margin and you want to buy 10 mini lots (1,000 units) worth of EURUSD , then you’ll need $20 worth of margin in your account
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