Forex trading has become increasingly popular over the years, attracting more traders to engage in the market. One of the essential aspects of forex trading is pip value, which is the unit of measurement that determines the price movement in a currency pair. The value of a pip varies across different currency pairs, with some having higher pip values than others. In this article, we will explore which forex pairs are 0.01 per pip.
What is a Pip?
A pip is the smallest unit of measurement in forex trading, and it stands for “Percentage in Point.” It represents the fourth decimal place in currency pairs that have four digits after the decimal point, or the second decimal place in currency pairs that have five digits after the decimal point. For instance, if the EUR/USD pair moves from 1.2000 to 1.2001, the change in price is one pip.
The pip value is crucial in forex trading because it helps traders to determine their profit or loss in a trade. The value of a pip is determined by the currency pair being traded, the trade size, and the exchange rate at the time of the trade. The pip value is usually calculated based on the base currency of the pair, which is the first currency listed. For example, if you are trading the EUR/USD pair, the base currency is the euro, and the pip value will be in euros.
Forex Pairs with 0.01 Pip Value
Forex pairs with 0.01 pip value are also known as fractional pip pairs. They are currency pairs that have a fifth digit after the decimal point, which is also known as a pipette. The addition of the fifth digit allows for more precision in price movement, which is beneficial for traders who want to execute trades with smaller price increments.
The following forex pairs have a 0.01 pip value:
1. USD/JPY
The USD/JPY is one of the most popular forex pairs, and it is known as the “ninja” pair among traders. The pair represents the exchange rate between the US dollar and the Japanese yen. The pip value for the USD/JPY pair is 0.01, which means that each pip movement is worth 10 yen.
2. USD/CHF
The USD/CHF pair represents the exchange rate between the US dollar and the Swiss franc. The pip value for this pair is also 0.01, which means that each pip movement is worth 0.1 Swiss francs.
3. EUR/CHF
The EUR/CHF pair represents the exchange rate between the euro and the Swiss franc. The pip value for this pair is 0.01, which means that each pip movement is worth 0.1 Swiss francs.
4. USD/CAD
The USD/CAD pair represents the exchange rate between the US dollar and the Canadian dollar. The pip value for this pair is 0.01, which means that each pip movement is worth 0.01 Canadian dollars.
5. EUR/USD
The EUR/USD pair represents the exchange rate between the euro and the US dollar. The pip value for this pair is 0.0001, which means that each pip movement is worth $0.10 for a standard lot size of 100,000 units.
Conclusion
Forex trading is a lucrative market that requires an understanding of pip value to determine the profit or loss in a trade. Forex pairs with 0.01 pip value provide traders with more precision in price movement, allowing them to execute trades with smaller price increments. The USD/JPY, USD/CHF, EUR/CHF, USD/CAD, and EUR/USD pairs are examples of forex pairs with 0.01 pip value. Traders should always consider the pip value when trading forex to manage their risk and maximize their profits.
