A trading pip at FNmarkets is the smallest unit of price movement in currency trading. It stands for "percentage in point" and typically represents a one-digit movement in the fourth decimal place of a currency pair’s price. For most currency pairs, one pip equals 0.0001.
For a better understanding, take a look at the examples below:
1. EUR/USD: If the price moves from 1.2000 to 1.2001, it has moved by one pip. This small change indicates the smallest price movement the pair can make.
2. USD/JPY: For currency pairs involving the Japanese yen, a pip is the second decimal place. If the price moves from 110.00 to 110.01, it has moved by one pip.
3. GBP/USD: If the price moves from 1.3550 to 1.3555, it has moved by five pips. Each change in the fourth decimal place represents one pip.
Understanding pips is crucial for calculating price changes, profits, and losses in trading.