In the world of Points, Ticks, and Pips Trading, there are three main things that you need to focus on: points, ticks, and pips. These three concepts can be confusing for new traders, so in this article, we will answer some common questions and provide some useful tips. Let’s get started!
Points
Points are the most basic unit of measurement in Points, Ticks, and Pips Trading. A point is simply the smallest change that a currency pair can make. For example, if the EUR/USD currency pair moves from $0.80 to $0.81, that is one point.
Ticks
A tick is a slightly larger unit of measurement than a point. To measure ticks, you need to use a special tool called a tick chart. Tick charts show every single movement that a currency pair makes – even if it is just a fraction of a point.
Pips
Pips are the largest unit of measurement in Points, Ticks, and Pips Trading. A pip is equal to one-hundredth of a point. So, if the EUR/USD currency pair moves from $0.80 to $0.81, that is one pip.
The Correct Term Varies by Market and Context
In the world of Points, Ticks, and Pips Trading, there are three main things that you need to focus on: points, ticks, and pips. However, the correct term to use depends on the market you are trading in and the context of the conversation.
For example, in Forex markets, the term “pip” is used almost exclusively to refer to one-hundredth of a point. In other markets, such as Futures or Equities, the term “tick” is often used instead of “pip.” And finally, in some cases – such as when discussing very small price changes – the term “point” may be used instead of “pip.”
So Which Term Should You Use?
The best answer is: it depends. If you are talking to another trader, make sure to use the term that they are using. And if you are unsure, always err on the side of using the more specific term (for example, “pip” instead of “point”).
This article should have answered some of your questions about Points, Ticks, and Pips Trading. If you have any other questions, or if you would like some tips on how to trade effectively in this market, please feel free to leave a comment below! Thanks for reading!