When someone says I have made 20 pips in Forex or any other amount of pips, it can be hard to understand if you do not know what is a pip in Forex.
Specific amount of pips in Forex can be understood in many different ways. This article will explain what is change in the price of a currency pair by 10, 20 and 30 pips in Forex on the MT4 chart.
What is 20 Pips in Forex
If you do not understand what is a pip in Forex you need to read the article what is pip in Forex. In that article you will understand what is pip and how the price of a currency pair is defined.
You need to know the basics in Forex in order to understand what is 20 pips in Forex or any other amount of pips in Forex.
Pip is a change in the price of a currency pair. The amount of pips can vary from pair to pair but the logic is the same.
What is Meaning of 20 pips in Forex
When you say any amount of pips in Forex, like 10 pips or 20 pips in Forex, to you or any other trader does not need to mean something.
You need to put that amount in some context. For example, context could be that the price have changed for 20 pips.
If you say that to someone or someone says that to you it will mean that the price of a currency pair has changed for 20 pips since last time you have checked the price.
The time frame can be from 1M, which is one minute chart, to daily time frame which is expressed like D1.
What is 10 Pips in Forex
On the image below I have took one example on the GBPNZD currency pair to show you what means 10 pips.
10 pips means a change in the price of a currency pair you are looking at. The start price of a currency pair was 1.91834 and after a while as time passes, the price has changed by 10 pips.
The price of a currency pair fall down by 10 pips from 1.91834 to 1.91734.
Same change could happen if the price rise up from 1.91834 to 1.91934. The change will be by 10 pips.
The Price Change by 20 Pips
Second example is shown on the image below. The price has changed by 20 pips.
Start price was the same as in the case of 10 pips. The price changed from 1.91834 and fall down to 1.91634. The change of 20 pips has happened in very short time.
The time frame I am looking at, on which the change is visible, is set to H1 which is one hour time frame.
What is 30 Pips in Forex
Third example is change in the price by 30 pips. Start price is the same as on the first two example.
The price started from 1.91834 and after several minutes it fall down to 1.91534. The change from 1.91834 to 1.91534 is 30 pips.
The change from 10 pips, 20 pips and 30 pips is visible as a one black candle. One candle is enough because I have set the time frame on 1H which is one hour time frame.
The price has changed in one hour time frame, 1H, by more than 30 pips.
Pip Meaning in Different Scenario
You need to understand that the number of pips can be said in the different context. My example was in the context of a price change on some time frame.
Someone can use 20 pips in the context of the profit. Profit can be expressed with the number of pips. The profit will be different for 20 pips if you use different lot size.
If you say you have earned 20 pips without saying which lot size you have used, person to whom you have said that will not mean too much.
You cannot calculate your profit for the number of pips without knowing lot size. One pip for standard lot size, 1.00 lot, can worth $10.00. If you use micro lot size, 0.01, one pip can worth $0.10.
Table below shows how much is the pip value for different lot size.
|Volume||Pip value in USD|
|1 standard lot||100,000||1.00||1 pip=$10.00|
|1 mini lot||10,000||0.10||1 pip=$1.00|
|1 micro lot||1,000||0.01||1 pip=$0.10|
|1 nano lot||100||0.001||1 pip=$0.01|
The change in the price can be from 0.1 pips which is expressed as a pipette. It is 1/10 of a pip.
How much the price changes is usually said with the amount of pips instead using pipette because small change than a pip is not worth mentioning.
Any amount the price changes you can say to yourself or someone else within specific time frame. Will that be 1M, one minute, or 1H, one hour time frame.
It does not matter as long as you say pip change in some context.
In the example above if I do not say the change is on H1 time frame, someone could think the change is on a daily basis or even on 1 minute time frame.