Hi, I find pips confusing. I have gone through the baby pips lesson on it, buyt still find pips kind of hard.
Here is an example. I am demo trading. I put an entry for USTech.index trade at 6386.70 long. Set the SL at 6281.44.

(a) How many pips loss is that?
(b) When I drag my cross hair line between the two prices it shows 10526 PIPS on the hair line! Is that correct?
© If the entry is at 6386.70 and I want to put a SL at 100 pips below that, what price will it be?
(d) Do the words pip and points mean the same thing?
(e) How do I set a trailing stop of 100 pips using MT4 platform? Is it a good idea or will it prevent the ‘breathing’ space for the trade prematurely?

Sorry for too many questions. Please answer all or at least some of them if possible.
Cheers,
Clem

clemG
hehe

ok mate, wipe your mind clean … ok

1. The reason why you are confused is because it’s common for the industry to confuse you and a lot of poeple you talk to … chances are, they will not understand what a POINT vs PIP vs PIPPETTE is

now… Babypips is correct on the definition of a pip
but let’ me also say it another way

1. Let’s talk dollars and cents first
You have \$1 right
and you have subdivisions of that dollar called CENTS and
we have a certain amount of cents in the dollar (Depending on where we live)
so… 100 cents = 1 dollar (obviously)

what you take away from this is… MAIN PART and SUB PARTS

1. some instruments are confusing, like Japenese Yen

so… before we get onto your instrument, let’s just UNDERSTAND A CONCEPT HERE… ok

USD JPY (Dollar Yen) = 111.290 (note in ends in 3 decimal places)
EUR USD (Euro Dollar) = 1.18818 (note…5 Decimal places)

so now
Understand these prices are quoted in terms of POINTS not pips
also understand YOUR CROSSHAIR on MT-4 is showing you POINTS

there
10 POINTS = 1 PIP

also, a Pippette and a Point are exactly the same thing
Just call it Points and Pips… ok it’s simpler

Now. now that you understand that…

if i’m trading EUR USD (Forget pip spreads ok)
and i start at 1.18818
and i take profit at 1.18828

this is… 10 POINTS 28-18 = 10
Therefore it’s 1 PIP profit
it’s easier if you do this
when you look at the quote 1.18818
imagine it like this 1.1881 8
or like this 1.1881 . 8
or you can just forget it like this 1.1881

on your chart WITH YOUR CROSSHAIR if you measure the distance from 1.18818 to **1.18828 it will show
10
THIS MEANS 10 POINTS or 1 Pip
got it

now
USD JPY works like this
111.290

so… drop off the zero
look at it like this 111.29
or like this 111.29 0
or like this 111.29 . 0

so 1 pip would be 111.290 to 111.300
or 111.29 - 111.30 Make sense
Your cross hair will say 10
meaning 10 points or 1 pip

now… i don’t trade your index, but i can give you this advice to figure out what is a pip and point

Method 1
Open the chart, go to the little arrow in the top right corner and drop dwon the price
if the price is say… 6386.70 and the zero is the last number and IT IS SMALLER THAN THE OTHER NUMBERS then it means the price in pips is 6386.7 got it

Method 2 : get your cross hair and drag down so it says 1,000 1 thousand points will be 100 pips

Method 3 : because indexes are weird unlike say EUR USD where 1.0 Lots = \$1 per pip, Indexes are different, i would suggest doing a chat session with your broker and ask him this

what is the minimum lot size for USTech100
if US TECH 100 Moved 1 pip how much money would i profit assuming no pip spread and that i won the trade

so let’s say they say it’s something like a min of 1.0 Lots and you make \$1.40 if it moves 1 Pip

that then means that 1 pip = \$1.40 worth of profit,
but more importantly… hehe if it goes against you, it means you are chewing through money quickly
so 10 pips would be \$14
and 100 would be \$140 lost
see what i mean

the easiest way for you to figure this out is
CROSS HAIR HAS TO SAY 1,000

another way is
open a demo and put down 1.0 Lots and see what happens

test it from 6386.70 to 6386.71
and from 6386.70 to 6386.80

put both trades down at the same time and see what happens

you’ll notice that one will be a few cents say like 1.3 cents and the other will be \$1.30 or something like that
so… the one that is closes to the dollar is correct
then confirm the distance with your crosshair to doublecheck it

AS FOR TRAILING STOPS
don’t use Automatic Trailing stops
Trail it Manually

lastly, there are no stupid questions (unless you want to challenge if the earth is flat or if gravity exists) hehe
be cool mate

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Thanks Martin,

I am getting the idea, But will need to read it a few more times to be sure I get it.
I much appreciate your help and taking the time to write such a detailed response.

I really, really appreciate it.

Cheers
Clem

You’re Welcome

yeah… re read it a few times, it’ll help

As usual confusion for any new trader. I also got confusion when I started using pip. The basic confusion here is as a new trader we do not understand the difference between pips and points. This things are different. You can get clear information of pips form BabyPips. That’s why it is. Martin has given a brief description. I am absolutely agree with him. But you need to practice more to get clear concept.

i Completely agree with Ethan_Jeremiah

it has been my experience as follows

1. Beginners always ask “what is the formal standard,… what is a pip BY DEFINITION”

2. Beginners don’t understand that it’s really about the environment that you are in.
Example. if you work in an Investment bank they will most likely use BASIS POINTS or POINTS as their measure.

3. there are a few terms that beginners should be familiar with, BASIS POINTS. POINTS, PIPS, PIPPETTE’s

4. Beginner’s should also understand that it is not so important to know what the entire industry is calling them, SO LONG AS YOU UNDERSTAND WHAT YOUR BROKER CALLS THEM and how they relate to your chart and your trade.

at the end of the day, all you want to know is this
if i’m trading a currency and i’m trading with 0.10 lots, and the price moves 10 pips
did i make \$1 Did i make \$10 did i make \$100
THAT’S ALL THAT MATTERS
because outside of making money, who really gives two craps what it means… No One?

so… beginners, DON’T CONFUSE YOURSELF OK
just understand PIPS MEASURE PRICE MOVEMENT
and
the reason why we don’t use USD or any other currency to measure price movement is… because Currency values are variable

THE PIP IS A STANDARDIZATION , that’s all it is

A nice description Martin; very informative post!

thanks mate, appreciate it

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You are always welcome! Keep it up with the good work.