Okay, so today I had to get around to do some other things than trading, although I sure regret doing so now.. sort of..

Some rather heavy moves on EURNOK this morning, with EUR appreciating a full 939.7 pips, representing a 1.22% increase. To put it like this, going 100,000 EUR long at the 7.7279 level and selling again at the 7.82187 level would’ve resulted in a 100,000*0.0122 = 1220 EUR profit. Why did I ever go to school followed by work today, I should’ve been trading…

Well, a new week and new opportunities over the weekend. For now, have great time.

After some other posts I got asked about pips and if I could explain it in laymen terms, and as such, well, here we go.. I’ll give it a shot at least.

Pip generally refers to percentage in point, and is the lowest decimal/unit an exchange can take place at. This is typically 1/10.000 (fourth decimal point). e.g EURUSD is quoted using five decimals, but only four are significant.

A practical example: A pip spread of 2 between bid and ask for EURUSD, which happens to be the deal I have with my brokerage house, means that while purchasing/asking we quote a price of e.g. 1.46945, while at the same time the bid price is 1.46925. In this case, the 2 pips is the fee paid to the brokerage house for their services.

In the process of working back yesterday’s loss I made a bet on the EURNOK about ECBs statement today. I shorted 50,000 EUR at 7.7549 and repurchased it at 7.7365 giving a 184 pip (0.24%) profit.

(30 pip spread between bid/ask price from broker)