Hey there, future forex trader! Get ready to dive into the world of numbers like never before. Numbers will become your best friends, your constant companions. You'll be surrounded by numbers day and night, even in your dreams. But hey, that's just how it goes. The more numbers you have, the better you can keep track of things. Before you jump headfirst into forex, though, there are some important things you need to understand.
Let's talk about pips and pipettes, two terms you'll come across a lot as a newbie trader. These terms are super duper important, so pay attention!
A pip is a fancy word traders use to measure the change in value between different currency pairs. It's like a little unit of measurement. Now, a pipette is the last decimal place in a quotation. Most currencies have values expressed up to four decimal places, except for the Japanese yen. The yen is special because it only goes up to two decimal places.
Let's imagine you're trading the EUR/USD pair. If it moves from 1.2250 to 1.2251, that's just one pip. But if it jumps from 1.2250 to 1.2259, that's a whopping NINE pips! That's a pretty sweet deal, right?
So there you have it, my friend. Remember, understanding pips and pipettes is crucial for your forex journey. Now go out there and conquer the world of trading with your newfound knowledge!
But what about those little pipettes? We're not trying to take you back to chemistry class or anything like that. We just want to talk about being more precise when you're looking at gains.
Imagine you're looking at the EUR/USD pair again. What if the numbers went from 1.22503 to 1.22504? That's just one pipette. We use five decimal places to get the value of a pipette. Usually, you'll focus on pips, but it's good to know about pipettes too. It can help you decide whether to stay in a trade or not.
Now that you know more about forex, do you think you're ready to start trading? Hold on there — there's still a lot more to learn. We always say this in forex land, but if you're really new, it's smarter to get a demo account first. Even if you have some investing experience, a forex demo account is the way to go. It's not a big deal if you spend a few months learning on your demo account. It's better to lose fake money and start over than to lose real money and have trouble later on.
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