How much is a pip worth nowadays?

[ForexArticles]

Some brokers have switched to a 5 decimal pricing system. Apparently to reduce the spreads that they offer. This has the implication that what we know as a pip is now 10 pips as they define it. So a profit of 400 pips is actually a profit of only 40 pips.

Do we now change our terminology?

[ForexMagnates]

I think that the introduction of the fractional pip shouldn't change the terminology. Pip by definition known to me is a 1/10,000 - which is the fourth digit after the dot. So in 1.42236 - pip value is 3/10,000. I'd say that 6 - the fifth digit - shouldn't be called the 'new pip' but be called 6 tenths of a pip.
What do you think?

[Henry]

Originally Posted by ForexMagnates

I think that the introduction of the fractional pip shouldn't change the terminology. Pip by definition known to me is a 1/10,000 - which is the fourth digit after the dot. So in 1.42236 - pip value is 3/10,000. I'd say that 6 - the fifth digit - shouldn't be called the 'new pip' but be called 6 tenths of a pip.
What do you think?

I agree that it is only 1/10th of a pip, but then someone who touts a new strategy claims that it makes him 4000 pips a month when it is only 400 pips as we know it. Some confusion might arise in that respect.

[Egwig]

The broker known as OandA have for a long time had the option on their charts to use 4 or 5 digits.
The trader can switch the last digit on or off.
They have always called the fifth digit a 'piplet', i.e. a tenth of a full pip.
I never liked that name very much but at least it does help to differentiate from a full pip.

Egwig

[Webster]

Originally Posted by Egwig

The broker known as OandA have for a long time had the option on their charts to use 4 or 5 digits.
The trader can switch the last digit on or off.
They have always called the fifth digit a 'piplet', i.e. a tenth of a full pip.
I never liked that name very much but at least it does help to differentiate from a full pip.

Egwig

Thanks for the clarification. That was bothering me.

Webster
E$P$

[Egwig]

Originally Posted by Webster

Thanks for the clarification. That was bothering me.

Webster
E$P$

You are very welcome.

The topic is more fully discussed and suggests more links and references here:-

http://en.wikipedia.org/wiki/Pip_%28Finance%29



Pip (percentage in point)
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In finance, a percentage in point (pip or point) is the smallest price change that a given exchange rate can make. Since most major currency pairs are priced to four decimal places, the smallest change is that of the last decimal point - for most pairs this is the equivalent of 1/100 of one percent, or one basis point.[1]

In order to calculate the pip value or how much is one pip, some additional information is needed, such as: trading size, leverage used, and the actual rate of the pair for which you want to calculate the pip value. For example in case of US Dollar, with trading volume of 1 lot (generally 100,000 units of the base currency), the minimum fluctuation point will be 10 USD.[2]

Egwig

[herry_fxhope]

Thank's about your suggestion

[SlimFX]

That depends.

Standard lot / 100k / Pipvalue = 10 $
Mini lot / 10k / Pipvalue = 1$
Micro lots / 1k / Pipvalue = 0.1$

Hope this helps