PIPS, Lots, Profit and Loss
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PIPS
As we’ve said before, the PIP is the smallest number to the right of the decimal place. The pip value is a function of the exchange rate and lot size, though normally variations in lot size will only move the decimal place.
Since most of you will be trading with US Dollar accounts we’re going to start with pairs where the USD is quoted first, and then move on to the reversed pairs. The basics are the same in both cases, and in fact it’s easier when the USD is not the base currency, as we’ll see.
Let’s start with a simple example: