"Pips" in Forex Trading

I stumbled on this excellent summary of what a "Pip" in Forex trading is..This is for Hein from Germany...after last nights discussion in our Forex Chat room...hope it's clear to you mate and take it easy !

The unit that is described with each tick within the forex markets and currency pairs is called “Pips” or percentage in points. If you are a trader in the Forex markets, than you will come to know and hear the term PIPs in everything that you do.

All a PIP is, is the value of what to call a single tick ( one tick ) move either up or down. You might here people use the term points in the stock market, but in the forex markets, they are called PIPs

Put simply, a pip is the smallest unit of price for a currency. It's the last decimal point in every exchange rate or currency pair. For every one PIP, you make or lose $10 U.S. dollars. So if the market moved favorably to you 120 PIPs, then you would multiply 120x$10 which is $1200 dollars.

Even if you didn’t know how much money you are making or losing, the interface you use on your computer automatically calculates every PIP based on lot size (typically $100,000 U.S. dollars for regular sized lots in the forex markets and $10,000 dollars for mini lots).

This interface updates in real time and connects to the forex markets to give you up-to-date price spreads as they fluctuate.

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