Last update 2020.10.19
If you are interested in forex you have probably already come across the terms pip or pips. This is because the pip is a technical term used in forex trading to describe the smallest price change. This article will describe what a pip is and answer the question: what is the best pip calculator?
What you will learn ahead
- What is a pip?
- How to calculate pips in forex
- What is the best way to trade forex
- Using AI trading to improve my performance
Understand Pips in forex trading
Every community tends to create its own language and jargon. It is no different among forex market participants and traders. They have their own particular way of thinking about forex trading. That is why it is essential to understand what terms are used in forex, such as defining a pip.
Do you know what a pip is? The word PIP is an acronym for “price interest point” according to fxcm.com, or “percentage in point”. In both cases, the word pip (also written in lower case, as pip) designates the smallest price movement made by any exchange rate between two currencies.
Another way to think of one pip is 1/100 of 1% which is 1/10,000th of currencies quoted to four decimal places (such as the US dollar, where the smallest denomination is one penny).
Conversely, currencies such as the Japanese yen (JPY) which are already based in their smallest denomination are priced to two decimal places. In either case, a change of one pip would the smallest change in price in a given currency pair and would be reflected in the last digit.
Below are examples of one pip price changes for an arbitrary exchange rate:
- From 1.1005 to 1.1006, is an increase of one pip
- From 1.1005 to 1.1004 is a decrease of one pip
- From 104.20 to 104.21 is an increase of one pip
- From 104.20 to 104.19 is a price decrease of one pip
Do you notice the Japanese currency is priced differently?
In forex trading, Pips are normally the changes in the fourth digit after the decimal place, as we mentioned.
But the Japanese yen is different because it is already priced in its smallest denomination (i.e., imagine, hypothetically, if the US currency was based on the penny, instead of the dollar, then the US currency would also be priced like the yen).
Knowing the difference between why some pairs are four decimals places and others are five, when it comes to pips, is an example of why you need Wiseinvest’s financial content to be aware of all the details of the forex market. You should also never calculate PIPs again because we have the best PIP calculator.
There are also fractional-pips which add another decimal place to denote when a partial pip price change (i.e., 1.11115, where the 5 is a fraction of one pip).
Pricing forex in pips allows the traders to fine-tune their strategy and have a standard unit of measurement for all assets, and to facilitate communication between analysts and traders around the world.
Why use pips to calculate the trade result?
The reason pips are used to calculate forex trades is that leverage is used in currency trading, so even a tiny price change can have a significant profit or losses, depending on the trade size. When trading forex, your position consists of two simultaneous actions, a buy, and a sell.
For example, if you are trading euro vs the US dollar (EUR/USD), and want to form a position to seize an upward market movement, you would buy the pair.
So, you start a buy EUR/USD (long) position, which means you have a contract buying EUR and selling USD. You are purchasing a specific quantity of EUR, such as one standard lot (100,000 units), and the price you are paying is quoted in USD as the asking price.
After the movement is complete you close your position selling the same quantity of EUR and buying USD, at the prevailing bid price.
If you were right, you would make a proportional profit to the spread between the movements of those two currencies. If you were wrong that is the amount of your loss.
- For example, buying EUR/USD at 1.0955 and selling later at 1.0900, would result in a net profit of 45 pips (which is the positive difference between the buy and sell prices).
- Conversely, if you bought EUR/USD at 1.0955 and later sold it for 1.0900, you would have realized a loss of 55 pips, which is a negative difference between the buy and sell price.
This ability to measure profit and loss down to the smallest price increment is exactly what the PIP concept tries to capture in forex trading.
How to use pips to calculate trade results in forex?
Using again EUR/USD as an example of pips. Let’s give you some additional information. While I’m writing this article the market trade rate of this pair is 1.09186 (FXCM presents five decimal places to denote fractional pips, but the relevant digit goes only up to fourth).
My last position in EUR/USD made 4.1 pips of profit. And I traded 1,000 Contracts (the minimum amount in my Forex Broker). It means I made $0.41 (the main currency of my account).
To open this position my broker required $3.25 of my account margin from my account, which was used as collateral. So, after 35 minutes I had a profit of 12.61% over my invested margin.
To be more precise when calculated profit or loss, we should include the trade cost paid as the spread (the difference between the bid/ask) to the forex broker. But even just looking at the difference in pips, excluding the spread, can give you a very good idea of why measuring via pips is better than by percentage alone.
The Best Forex Pip Calculator
While calculating pips in forex does not involve complex mathematical equations, it can be time-consuming and tedious. We believe here at Wiseinvest that we have the best pip calculator for traders. The reason is that by using our Artificial Intelligence we make the pip conversion automatically to trade.
So, if you find any difficulty calculating pips, use our suggested calculator. Then, after subscribing to AI trading to trade automated for you, or AI Signals to stay up to date on the best trading signals, just copy the signals received in your email and paste them into the forex broker of your choice and wait for the outcomes to materialize. You can use our pip calculator and see our latest AI trades by clicking here.
Forex Pips vs CFDs
If you are interested in trading shares, you may be wondering if there is such a thing as a pip in stock trading. There is no usage of pips when it comes to trading shares, as there are already ready-made terms for communicating price changes: namely, ‘pence’ and ‘cents’.
For example, the image below shows an order ticket for IBM:
Depicted: MetaTrader 4 platform – pricing from Admiral Markets – IBM order ticket – Disclaimer: Charts for financial instruments in this article are for illustrative purposes.
The whole numbers in the quote represent the price in USD and the decimal numbers represent cents. This is readily understood and familiar for most traders. Therefore, there is no need to introduce any other terms, such as pips, though sometimes market jargon may include a generic term such as ‘tick’, to represent a movement of the smallest increment possible – in this case, one cent.
Whatever you are planning to trade, whether its
CFDs in Forex, or CFDs on shares, you will want to be using the best trading platform available. This is why you should try out using the MetaTrader plugin for MT4 and MT5. MTSE is a cutting-edge plugin that offers a much wider selection of indicators and trading tools compared with the standard versions.
The best way to trade forex
There are two ways to invest with our AI in forex:
1. Automated with AI-Trading. Check out the 3 steps to trade automated with our AI.
By trading forex automated with AI, you will save time and improve your performance without monitoring the market and managing trading platforms.
With Automated AI trading you do not need MT4 / MT5 and other trading platforms to invest in forex. All forex trades are automatically placed into your broker account every time that our AI system identifies a new worthy trading opportunity. You can monitor the AI trading performance in real-time directly on our dashboard.
Automated AI trading benefits
- Setup in 3 minutes.
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- APY of 40% over the past 13 years*.
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- Portfolio with 40 different automatic strategies.
- No MT4/MT5 or other platforms required.
- Test with a risk-free practice account.
- Trading results directly on our dashboard.
Don’t you have a broker account yet? Our AI is integrated to trade automated with the broker Oanda. Click here to open an account.
2. Manually with AI forex signals.
Wiseinvest also provides AI forex signals that perfectly fit into MT4, MT5, and any trading platform. To trade with our AI forex signals, you must simply copy the data you receive from each real-time signal into any forex brokerage account of your choice.
There are five unique variables for each AI signal, and each must be copied exactly, to match the performance of the signal as close as possible.
Each AI forex signal alert consists of the following five data points:
- Symbol (forex pair)
- Direction (long or short)
- Position size (number of units or lots)
- Take profit (price level to exit with maximum gain)
- Stop loss (price level to exit with maximum loss)
Check out how to trade with our AI forex signals.
- Subscribe to a Wise-Plan.
- Open a Brokerage account. Check this article about the best forex Brokers.
- Set an amount and a position size on our Wiseinvest dashboard.
- Our AI will send you real-time trading alerts by email and Telegram.
- Copy the signals and paste into your Brokerage account.
All forex signals are sent every time that our AI trading system identifies a new trading opportunity. Our trading strategies are developed on a variety of time frames such as 4 and 8 hours.
Wiseinvest AI forex signals are Market Orders and you do not need the entry price. You can copy each signal while it is available on our dashboard. We do this way to assure that traders will just place signals while they are good to be traded.
You can trade forex with our free forex signals clicking here, or with our Premium subscription that provides you unlimited AI signals and automated AI trading in partner brokers. Whether you are a beginner or a professional forex trader, our AI trading system can help you save time and improve your trading performance. Get started with free AI.
When investing through Wiseinvest automated AI trading or AI forex signals, you do not need to calculate pips and change the leverage in your forex broker account. Learn more about leverage in forex trading by clicking here.
What is the AI performance in forex trading?
The Win Rate of our AI moves as shown by the period and can reach up to 95%. The introduction relies upon the capable wild estimation metric, which infers that our model is valuable at whatever point the Win Rate is more noticeable than 60%. All methods of our AI trading system search for stable returns and sufficient results to achieve an ordinary return of 40% consistently (APY), without the usage of high impacts.
We appreciate that what is significant in forex trading is the definitive result. Thusly, the money related master needs to consider that Win Rate isn’t commonly the best estimation to measure execution in forex, as other signals providers uncover. For instance, out of 100 trades, solitary 1 trade may be an adequate disaster to make the 99 trades not gainful. For this circumstance, the Win Rate would be 99%, yet the convincing result would be unfeasible (negative).
We revolve around the appearance of 40% of APY and not just on Win Rate.
It is essential to see that forex brokers may charge spreads, commissions, and overnight costs in your trading account, and these components can impact the AI execution. You can check our forex trading history to see more about AI trading execution by clicking here.
How much do I need to trade forex with AI?
You can start in forex trading with a free AI forex signals or AI trading record and make a store from just $1 in the broker. It is moreover possible to test using a danger-free practice account with our AI trading structure. Regardless, to do a capable peril, the board in authentic records, we suggest you start from at least $100. Notice that some forex traders require assorted beginning stores to trade forex.
What is the trading strategy of our AI?
Our AI methodology is the blend of different AI trading structures, with more than 100 features, that portray 40 particular procedures which simultaneously consider: Quotes of the 28 forex pairs, Supports, and Resistances in different timeframes, Trends and Counter-designs, Cross-markers, Index of each pair, Economic Calendar, Investors Sentiment.
Our AI looks at those fundamental, technical, and sentiment factors that impact forex trading, and all models are surveyed constantly using different burdens. In the wake of completing the examination, the choice of the signal transmission procedure is made considering the improved likelihood of flashing advantage and the total open for theory.
Using technical analysis, our count considers not simply the instances of various examples, including sponsorship and deterrent levels and cross-pointers, yet our AI is moreover prepared to make its own progressing record for each cash pair, that is used to recognize what is the best course and target.
Practically identical to fundamental analysis in forex, the AI makes an association inside the budgetary calendar to find news data that can impact express money sets.
- PIP or pip means the smallest change in a forex currency pair’s price.
- It is useful to use pips to describe price changes because it is easily understandable around the forex world.
- With Wiseinvest you do not need to care about pip calculating, because our Artificial Intelligence can do all the work for you.
With a very small amount of pips made you can earn a lot of money, depending on your trade size. Likewise, the risk is also proportional, but we strive to manage risk efficiently with stop-loss levels included along with every signal. It is all about how you calculate your position.
That is why you need Wiseinvest Artificial Intelligence, we can provide forex trades with the right positions sizes and targets for live trading, based on your balance.
Disclaimer: Forex and Contracts for Difference (CFDs) are complex instruments and come with a high risk of losing money due to leverage. Forex trading is not suitable for everyone. You should consider whether you understand how forex and CFDs work and whether you can afford to take the high risk of losing your money.
The forex brokerages displayed shall disclaim the overall performance of traders in their platforms. Oanda warns that 76.8% of retail forex traders lose money trading CFDs. XTB warns that 80% of retail forex traders lose money trading CFDs. FXCM warns that 74.74% of retail forex traders lose money trading CFDs.
The performances aforementioned are not related to Wiseinvest AI forex trading and AI forex signals system. You can check the performance of our AI forex system on our dashboard.