A short YouTube tutorial by Alan Solarsh defining a pip (the smallest whole unit of price movement in forex) and explaining pipettes (fractional pips). The video contrasts typical four-decimal forex quotes (e.g., USD/ZAR) with instruments like gold that use two decimals, and demonstrates reading pips/pipettes on MetaTrader 4 chart tools.
This video tutorial explains to you what is a pip in the forex industry. So a pip is the smallest whole unit measured of the difference between the bid and ask spread. In a foreign exchange quote, a pip equals 1 to 100 or 1% or 0.0001. Thus the forex quote extends out to four decimal places split. Smaller price increments are measured by fractional pips or pipettes. So let me explain to you exactly what that means, because that is a lot of words that don't mean anything to you as the trader. So let me show you what it, what it looks like on a normal forex chart. Let's go here, let's go to USD. Let's go to USD Zor. Okay, so there's USD Zor. And over here, you can see here that there are four decimal places. So a pip is basically 100, 1000th of a cent of a price. Basically, that's what a pip is. So some pairs are only measured like normal pairs.
Or normal rands and cents, or dollars and cents. So let me go back and explain that to you on the gold chart. The gold doesn't have 4 decimals. The gold only has 2 decimals. Okay. But it still is measured in pips. So let me show you exactly how that works. So we're going to draw a line on the chart using the cross, using these square triangle and the circle emblems on your MetaTrader 4. So we're going to go grab a horizontal or rather a diagonal line. We're going to go and check it. And then when we draw the line over there, you can see in the top of the chart. Let me just take a screenshot for you and circle it for you. This number over here, the 153. Okay, I'm going to go back to my chart. Okay. And you can see there that number changes. So the first number is a three. Okay? That's the angle of the line that I'm drawing. The second number is, is the, is the pipettes. So it's 209 pipettes. Okay? A pip would then be thus be 20 pips or 20 cents. Okay? So on this pair, the, if the pair moves, it moves in cents as per the decimal places. Over here on, but that's on gold where there's two decimal places, whereas on Czar it moves in one, in one one thousandth of a fraction of a, of a cent. Okay? So if we had to draw the line, you'll see here, let's draw a line, it's still measured there in pips and pipettes at the top there. So it's 89. 89 pips, 899 pipettes. So this is a fraction of a pip. The last number is a fraction of a pip. So in other words, a pipette. So quite difficult to understand if you don't really understand the mathematics. But once you get your hang your head around it, it's very, very simple to understand. So I hope that you found this video interesting. Please, like, subscribe and comment on my videos. So subscribe that you get more information that I put out there and so that you don't miss another video. So please, like, subscribe and comment and I'll see you on my next video.
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