The term pip is derived from the English expression 'percentage in points'. Pip represents the smallest price change in the relevant market. The size of pip is different for different markets.

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For example, you might notice that the exchange rate of most currency pairs is expressed in four decimal places - that is, if, for example, GBPUSD moves from 1.2545 to 1.2546, moves by one pip. On the other hand, however, one pip in the USDJPY pair is equivalent to a price move of 0.01 because this pair is only two decimal places.

You can determine how much you gain or lose when the pip market moves with a batch size specified as the volume of your store. For example, the pip value for a 1 lot transaction for a EURUSD pair is $ 8.42.

This means that if the market moves in your 10-pound benefit, you will earn a profit of 84.2 EUR (8.42 x 10). On the other hand, however, if the market moves against you by 10 pips, you will get a loss of € 84.2 (8.42 x 10). It is very important to know the value of pip before opening a transaction on a given market to fully understand the size of your potential profit or loss.

Price bid and ask price

When trading on financial markets, there are always two awards available: ask price and bid (sales).

The bid price is always lower than the asking price and the difference between them is the so- spread, which is also the cost of opening a position on a given market.

For example, if you see a EUR / USD pair exchange rate in your trading platform, expressed as 1.18811 / 1.18821, it means the bid price is 1.18811 and the ask price is 1.18821

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When you open a long position or otherwise buy on a particular tool, your position will be open for ask and closed at the bid price. On the other hand, when you make a short position or otherwise "sell", your position opens at the bid price and closes at asking price.