## POSITION SIZE & PIP VALUES

#### A **pip** is the smallest price move that an exchange rate can make based on market convention

**Pip** is an **acronym** for “percentage in point”.

**quotes currency pairs by “5, 3 and 2” decimal places – also known as fractional pips or pipettes.**

- On a 5 decimal place currency pair a pip is 0.000
**10** - On a 3 decimal place currency pair a pip is 0.0
**10** - On a 2 decimal place currency pair a pip is 0.
**10**

**(multiply face value by .0001. 1/10,000th is a pip for all pairs (except JPY pairs a pip is .01)**

AUD/**USD – **AUD is the base currency**/ USD is the counter currency**

For example: If AUD/**USD** moves from 0.706**09** to 0.706**19**, that .000**10** USD move higher is** one pip**.

When trading FX and other symbols there are some easy rules to calculate the ‘pip-value’ of the trade so you can work out your **Risk Reward** quickly (potential gains and losses quickly)

- When trading a ‘spot’ instrument the pip value will always be in the second quoted symbol in the currency pair lets take a look at some examples:

EUR/**USD**, this means the pip value will be based in **USD** (U.S. Dollars)

GBP/**AUD **this means the pip value will be based in **AUD ** (Australian Dollars)

EUR/**GBP **this means the pip value will be based in **GBP **(Great British Pound) also known as Pound Sterling

- This also applies to commodity pairs such as Gold (XAU/
**USD**) – where the pip value will be based in**USD**

- For Indices, the point value will be based in the currency of the country that hosts that stock index; for instance,
**AUS200**is traded in Australia, which mean that the point value is given in**AUD**(Australian Dollars);**GER30**is traded in Europe which means that the point value is given in**EUR**(Euro);**US500**is traded in the US, so the point value will be in**USD**(US Dollars)

**(multiply face value by .0001. 1/10,000th is a pip for all pairs (except JPY pairs a pip is .01)**

A list of all traded symbols and their pip values is shown below. The pip scales in direct proportion to the trade size – so a 5 lot trade will have five times the value per pip as a 1 lot trade.

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