what is pip trading?

A pip, short for "percentage in point" or "price interest point," is a unit of measure used in the foreign exchange market to represent the smallest change in the price of a currency pair. In most cases, a pip is equal to 0.0001 of the quoted currency, but there are some exceptions. For example, the Japanese yen, which is quoted to two decimal places, has a pip value of 0.01.

In forex trading, traders often use pips to reference the profit or loss made on a trade. For example, if a trader buys a currency pair at a price of 1.2500 and then sells it later at a price of 1.2550, they have made a profit of 50 pips.

Pip trading refers to the practice of buying or selling a currency pair based on the movement of the pips. Some traders may try to profit from small changes in the exchange rate, while others may try to hold positions for a longer period of time in order to benefit from larger price movements. It is important for traders to understand how pips work and to use appropriate risk management techniques when trading based on pips.