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How To Calculate Pips In Gold - A Beginner's Guide
(MENAFN- Daily Forex) A pip, short for percentage in point, is a Forex term that refers to the fourth decimal in all currency pairs , except for Japanese Yen currency pairs, where a pip refers to the second decimal. Before fifth decimal pricing, a pip was the smallest increment of price moves. The fifth decimal is a pipette. Ten pipettes equal one pip. Given the popularity of gold trading in Forex portfolios, we will show you how to calculate pips in gold to Count Gold PipsUnderstanding how to calculate pips in gold begins with counting gold pips, which is straightforward. Like any asset, gold has a bid and an ask price . Traders buy gold at the ask price and sell at the bid price. The difference between both is the spread , which reflects your broker's markups and earnings. Here is an example showing how to count gold pips:
- You buy gold at the ask price of 2,029.05. You sell gold at the bid price of 2,087.45.
- Use the pip counting formula shown above.
- 1.0 lot equals 100 ounces, the standard volume for gold.
- A 1.0 pip move in gold equals $0.0049.
- The pip value changes with the price of gold, increasing with a decrease in price and vice versa.
Traders can calculate pips by subtracting the entry value of a trade from the exit value, using the entire quote with all decimals. The fourth decimal is a pip unless the quote has fewer decimals, like gold, where the last decimal is the pip.
Christopher Lewis Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.
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