Forex what is a pip
You will constantly see ads for "No Commission" trading - and then they promptly boast their low PIP spreads. But do you have any idea what a PIP actually is?
As Forex Trading there are no exchanges, a PIP is a fancy way of charging you an exchange fee, and saying that you don't have any commissions. Just know this - the Forex firms are not non-profit organizations, so one way or another, they are going to make their money. The best thing to know is that a PIP is their take of the money - and be aware of how they're calculated. The below information explains how to calculate point price (PIP):
All currency pairs can be subdivided into three logical groups - pairs with direct quote (EURUSD, GBPUSD), pairs with inverse quote (USDJPY, USDCHF), and cross rates (GBPCHF, EURJPY etc.).
price, for example for USDCHF and EURUSD it's 0.0001. For currency pairs with direct quote the pip price is constant.
EURUSD. Lot size is 100,000, tick - 0.0001. [pip] = 100000 * 0.0001 = $10.00
USDJPY. Lot size is 100,000, tick - 0.01. If current quote is 129.20, [pip] = 100000 * 0.01 / 129.20 = $7.74
GBPCHF. The lot size is J62500; if the current quote is 2.3000 and the base GBPUSD quote is 1.4550, [pip] = 62500 * 0.0001 * 1.4550 / 2.3000 = $3.95.