Point (point) forex.
It seemed such a simple question, “What is a Forex point?” sometimes causes a lot of misunderstandings and additional questions, because each currency pair has its own point value, and other factors also influence its size.
Point (point) forex - sometimes also called a pip, this is the last digit in the quote of a currency pair, which characterizes the minimum possible change in the exchange rate in relation to the currencies in the currency pair.
If you pay attention to Forex quotes , you will notice that each of the instruments has the same number of decimal places, but this factor has absolutely no meaning, one point will still be equal to the last digit in the entry.
For example.
AUDCAD – 1.0596 a price increase of 1 point in this case will lead to a quote of 1.0597
CADJPY – 92.47 in this case the change to will already affect the second digit after the decimal point.
In addition, the quote for a currency pair in some cases may have three or five decimal places.
Forex point value.
When trading, you should take into account that although all transactions have standard volumes, which are measured in lots, the cost of one Forex point for each currency pair will still be different.
the base currency is always used to measure trading volumes , then the cost of one point will be calculated depending on the quoted one.
The more significant a given currency is, the greater the value of our indicator. In addition, we should not forget about the number of characters in the quote; this factor also directly affects the calculations.
The cost of a point also directly depends on the volumes performed; the larger the volume of the transaction, the greater this indicator.
The simplest example is the calculation for the EURUSD pair; for convenience, let’s take the volume of transactions as 1 lot or 100,000 units of the base currency.
0.0001x100,000 = 10 US dollars
Let's change the currency pair to USDJPY
0.01x100,000 = 1000 Japanese yen or 10.55 US dollars
Let's try to calculate using expensive currencies EURGBP
0.0001x100,000 = 10 pounds sterling or about 15.15 US dollars.
As you can see, the cost of a Forex item is influenced by several indicators - the quoted currency, the number of digits in the quote and the number of Forex lots .