Author: Kristian Fiskerstrand

Apparently last weeks downer has made an impression on my psyche resulting in me being too risk-averse this week. Below is one of the several examples of such today.

I shorted EURUSD at 1.46065 and purchased it back at 1.46057 giving a mere 1 pip profit. Why? as we can see EUR had a ride with a couple highs testing resistance around 1.4614 so it was simply a relief to close the position at a small profit rather than loss.. but obviously, what I should've done was to stick through it and wait for the drop to 1.4584 which would've given a 22 PIP profit..

Well, we can't win them all...at least the initial expected development was correct, now to work on timing..

Okay, so today I had to get around to do some other things than trading, although I sure regret doing so now.. sort of..

Some rather heavy moves on EURNOK this morning, with EUR appreciating a full 939.7 pips, representing a 1.22% increase. To put it like this, going 100,000 EUR long at the 7.7279 level and selling again at the 7.82187 level would've resulted in a 100,000*0.0122 = 1220 EUR profit. Why did I ever go to school followed by work today, I should've been trading...

Well, a new week and new opportunities over the weekend. For now, have great time.

After some other posts I got asked about pips and if I could explain it in laymen terms, and as such, well, here we go.. I'll give it a shot at least.

Pip generally refers to percentage in point, and is the lowest decimal/unit an exchange can take place at. This is typically 1/10.000 (fourth decimal point). e.g EURUSD is quoted using five decimals, but only four are significant.

A practical example: A pip spread of 2 between bid and ask for EURUSD, which happens to be the deal I have with my brokerage house, means that while purchasing/asking we quote a price of e.g. 1.46945, while at the same time the bid price is 1.46925. In this case, the 2 pips is the fee paid to the brokerage house for their services.