Forex, or foreign exchange, is the largest financial market in the world. It is a decentralized market where currencies are traded globally 24 hours a day, five days a week. Forex traders buy and sell currencies in the hope of making a profit from the changes in their values. A pip is a unit of measurement used in Forex to measure the change in the value of a currency pair. In this article, we will explore what pips are and how many pips per trade are needed to make a profit.

### What are pips?

Pip stands for “percentage in point.” It is the smallest unit of measurement in Forex. One pip is equal to 0.0001 of a currency unit. For example, if the EUR/USD currency pair increases from 1.2000 to 1.2001, it has moved up by one pip. Similarly, if the USD/JPY currency pair decreases from 109.50 to 109.49, it has moved down by one pip.

The value of a pip varies depending on the currency pair being traded and the size of the trade. For example, if you are trading the EUR/USD currency pair and your trade size is 100,000 units, the value of one pip is $10. If you are trading the USD/JPY currency pair and your trade size is 100,000 units, the value of one pip is 1,000 yen.

### How many pips per trade are needed to make a profit?

The number of pips per trade needed to make a profit depends on several factors, including the currency pair being traded, the size of the trade, and the level of leverage used. Generally, traders aim to make a profit of at least 10 pips per trade.

To understand why 10 pips per trade is a common target, let’s consider an example. Suppose you are trading the EUR/USD currency pair with a trade size of 100,000 units and a leverage of 1:100. If the price of the EUR/USD pair moves up by 10 pips, you will make a profit of $100. If the price moves up by 20 pips, you will make a profit of $200, and so on.

However, it is important to note that making a profit in Forex is not just about the number of pips gained or lost. Other factors such as the spread, trading costs, and market volatility can also impact your profitability.

### How to calculate pip value

To calculate the value of a pip, you need to know the currency pair being traded, the size of the trade, and the current exchange rate. The formula for calculating pip value is:

### Pip value = (0.0001 / Exchange rate) x Trade size

For example, let’s say you are trading the USD/JPY currency pair with a trade size of 50,000 units and the current exchange rate is 109.50. The pip value would be:

### Pip value = (0.0001 / 109.50) x 50,000

### Pip value = $4.56

### This means that for every pip the USD/JPY currency pair moves, you will gain or lose $4.56.

### Conclusion

Pips are a crucial part of Forex trading. They allow traders to measure the change in the value of a currency pair and calculate their profits or losses. The number of pips per trade needed to make a profit depends on several factors, including the currency pair being traded and the size of the trade. A common target for traders is to make a profit of at least 10 pips per trade. However, it is important to remember that making a profit in Forex is not just about the number of pips gained or lost. Other factors such as the spread, trading costs, and market volatility can also impact your profitability.