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The foreign exchange market is the largest and most liquid financial market in the world, with around $7.5 trillion traded every day, attracting everyone from central banks and multinational companies to hedge funds and individual retail traders. One of the first things you discover when you start learning forex is that you never trade a currency on its own. Instead, you trade it against another currency. A currency pair is simply the value of one currency compared with another, and every trade you place in the forex market is based on that relationship. It sounds straightforward enough, but I've found that this is where many beginners get stuck. They can recognise a chart showing EUR/USD or GBP/JPY, yet they aren't entirely sure what those letters actually represent or why the price moves up one day and down the next. If you don't understand currency pairs, you don't really understand how the forex market works. Once the concept clicks, everything else starts to make more sense. Reading price quotes becomes easier, economic news suddenly has context, and you begin to understand why traders choose certain pairs over others. Whether you're placing your very first trade or simply filling in a few gaps in your knowledge, getting comfortable with currency pairs is one of the best investments you can make as a trader. A currency pair is a quotation showing the value of one currency relative to another: the first is the base currency, the second is the quote currency, and the price tells you how much of the quote currency buys one unit of the base. Pairs fall into three groups — majors, minors and exotics — and majors such as EUR/USD offer the highest liquidity and lowest trading costs. Ready to trade your first currency pair? A currency pair is a quotation that shows the value of one currency relative to another. Every forex trade involves buying one currency while simultaneously selling another, so currencies are always traded in pairs rather than individually. Every currency pair has two parts: Think of it like comparing the prices of two products in a shop. You're not looking at the value of one item in isolation; you're comparing it against something else. Forex works in exactly the same way. For example, if EUR/USD = 1.15, it means €1 is worth US$1.15. In other words, you would need 1.15 US dollars to buy one euro. Once you understand that simple rule, reading forex prices becomes much less intimidating. One thing I always tell new traders is that a currency pair never moves in isolation. A rising or falling price simply tells you how one currency is performing relative to the other. Using EUR/USD as an example: This is one of those concepts that feels confusing for about five minutes. Then it suddenly clicks, and you'll wonder why it seemed complicated in the first place. Every currency pair shares a few important characteristics: Once you understand how a currency pair is quoted and what its price represents, the rest of forex starts to become much easier to follow. It's the foundation that everything else is built on. Read more: Long vs Short Position Compared: How to Trade Each Like a Pro Currency pairs are normally divided into three categories based on how frequently they're traded, how much liquidity they attract and the types of currencies they contain. Understanding the differences matters because each group offers a different balance of trading costs, volatility and risk. As your experience grows, you'll probably trade all three at some point, but they certainly aren't created equal. The three main types are: Let's look at each one in more detail. Major currency pairs are the most actively traded currencies in the forex market. What defines a major pair is simple: the US dollar (USD) always appears on one side of the trade, paired with the currency of another major economy. Because these pairs attract the highest trading volume, they generally offer the greatest liquidity, the tightest spreads and the fastest trade execution. There are good reasons why the majors dominate the market. Millions of transactions take place every day between governments, multinational companies, investment banks and retail traders. That constant flow of buying and selling means there's usually someone willing to take the other side of your trade, resulting in smoother price movement and lower trading costs. Another advantage is transparency. Major currency pairs are driven largely by well-publicised economic releases, central bank decisions and geopolitical developments. Whether it's an interest rate announcement from the Federal Reserve, inflation figures from the Eurozone or employment data from the United States, there's rarely a shortage of information to help explain why prices are moving. The forex market recognises seven major currency pairs: You may also notice that AUD, CAD and NZD are often referred to as commodity currencies. That's because the economies of Australia, Canada and New Zealand rely heavily on exporting commodities such as iron ore, crude oil, natural gas and dairy products. As commodity prices rise or fall, these currencies often react alongside them. After years of trading, if someone asked me where to begin tomorrow, my answer wouldn't have changed much. I'd still suggest starting with one or two of the major pairs. They're cheaper to trade, there's an endless supply of news and analysis to learn from, and their behaviour is generally easier to understand than thinner, more volatile markets. That doesn't mean they're easy, forex never is, but they usually offer fewer unpleasant surprises than some of the more exotic alternatives. These nicknames are widely used by traders, analysts and financial media. Don't be surprised if you hear someone say they're "buying Cable" or "watching the Aussie", they're simply referring to the currency pair rather than using its full symbol. Minor currency pairs, often called cross currency pairs, are forex pairs that do not include the US dollar. Instead, they combine two major currencies, allowing traders to focus on the relationship between those economies without the influence of the world's reserve currency. There's one small point that often catches beginners out. You'll sometimes hear the terms "crosses" and "minors" used interchangeably. Strictly speaking, every pair without the US dollar is a cross, while the term minor pairs generally refers to the most actively traded crosses. In practice, though, most traders use both terms to describe the same group. Some of the best-known minor pairs include: These pairs tend to offer good liquidity, although not quite at the same level as the majors. As a result, you'll usually see spreads that are slightly wider and price movements that can be a little less predictable during quieter trading sessions. Unlike major pairs, where the US dollar is involved in every trade, minor pairs are influenced by two separate regional economies. If you're trading EUR/GBP, for example, you'll want to pay attention to economic releases from both the Eurozone and the United Kingdom. Likewise, GBP/JPY can react sharply to news from either the UK or Japan, making it one of the more volatile crosses in the market. One pair that's earned quite a reputation over the years is GBP/JPY. Traders often nickname it "the Dragon" because of its large daily price swings. Those bigger moves can create plenty of trading opportunities, but they also demand disciplined risk management. This pair is one of my favourite pairs to trade. Minor pairs become particularly useful when you want to trade a regional theme rather than simply taking a view on the US dollar. For example, if you believe the UK economy is likely to outperform the Eurozone, EUR/GBP allows you to trade that idea directly. You're comparing Europe against Britain, without US economic data muddying the picture. It's a slightly more focused approach, and once you become comfortable following multiple economies, minor pairs can open up opportunities that major pairs simply don't offer. Personally, I think minor pairs are worth exploring once you've built some confidence with the majors. They introduce a few more moving parts, but they also teach you to think beyond the US dollar, which is an important step as you develop as a trader. An exotic currency pair combines a major currency with the currency of an emerging market or a smaller economy. These pairs are the least traded in the forex market and are typically characterised by lower liquidity, wider spreads, higher volatility and greater sensitivity to political and economic events. Because fewer traders and institutions actively buy and sell these currencies, prices can move much more aggressively than you're probably used to seeing on the major pairs. That can create opportunities, but it also introduces a level of risk that many beginners underestimate. Some commonly traded exotic pairs include: Although these pairs are available through many brokers, they don't attract anywhere near the same trading volume as EUR/USD or USD/JPY. The main reason comes down to liquidity. When fewer market participants are trading a currency pair, it becomes harder to match buyers with sellers. That often means orders take longer to fill, prices can jump between levels, and the difference between the bid and ask price (the spread) becomes much wider. Political uncertainty can also have a much greater impact. Elections, changes in monetary policy, inflation shocks or geopolitical events can cause exotic currencies to move sharply within a short period. In some cases, prices can gap significantly, particularly after major news announcements or over weekends. I've seen plenty of newer traders become attracted to exotic pairs because of the huge price swings. On paper, those movements look exciting. In reality, wider spreads and sudden gaps can quickly turn what looked like a good trade into an expensive lesson. If you decide to trade exotics, I'd always suggest reducing your position size and treating risk management as your first priority rather than an afterthought. I don't trade exotic pairs myself. Now that we've looked at all three categories, it's much easier to see why traders choose different pairs depending on their experience and objectives. The progression is fairly logical. As liquidity decreases, trading costs generally increase, and price movements become less predictable. That's one of the reasons most traders spend the majority of their time focusing on major pairs, only branching out into minors or exotics once they've gained more experience and developed a consistent trading approach. A currency pair rises when the base currency strengthens against the quote currency, and it falls when the base currency weakens. Every movement you see on a forex chart reflects the changing relationship between two economies, not the value of one currency in isolation. Take EUR/USD as an example. If traders become more confident in the Eurozone economy while sentiment towards the US dollar weakens, EUR/USD is likely to move higher. If the opposite happens, the pair will usually fall. This is also where you'll hear traders talk about being bullish or bearish: Once you start thinking in terms of relative strength rather than absolute value, price movements become much easier to understand. No single factor controls the forex market. Instead, prices react to thousands of buying and selling decisions every second. However, most movements can usually be traced back to three major drivers. Interest rates are one of the biggest influences on currency values. When a country's central bank raises interest rates, its currency often becomes more attractive because investors can potentially earn a better return on deposits and investments denominated in that currency. That's why traders pay such close attention to decisions from central banks like the Bank of England, the Federal Reserve and the European Central Bank. Even hints about future rate changes can move the market before an official announcement is made. In my experience, some of the biggest trends begin long before a rate decision itself. The market spends weeks, or even months, trying to anticipate what central banks are likely to do next. Economic reports provide regular snapshots of a country's financial health. Some of the biggest market-moving releases include: Strong economic data often supports a country's currency, while disappointing figures can weaken it. Of course, markets don't always react in the obvious way. Sometimes the numbers are already priced in, which is why experienced traders focus as much on expectations as they do on the headlines. Read more: Understanding Forex Fundamental Analysis Not every price move is driven by economic data. Sometimes it's simply about confidence, or the lack of it. When investors feel optimistic, they're generally more willing to buy higher-risk assets and currencies. During periods of uncertainty, however, money often flows into traditional safe-haven currencies such as the US dollar (USD) and the Swiss franc (CHF). You'll often see this during geopolitical tensions, financial crises or unexpected global events. Even if a country's own economy hasn't changed overnight, shifts in market sentiment can still have a significant impact on its currency. Read more: What Is Market Sentiment? Definition, Indicators and Strategies As you begin trading, you'll notice that every currency pair has two prices rather than one. The tighter the spread, the lower your trading costs. That's one of the reasons major currency pairs are so popular, particularly with day traders and scalpers who may place multiple trades throughout the day. Read more: Bid and ask price explained: What it is and how it works in trading You may also come across the terms direct quote and indirect quote. They're simply different ways of expressing an exchange rate depending on which currency is used as the base currency. It's the same relationship viewed from a different perspective, so there's no need to overcomplicate it when you're first learning forex. One thing that took me a while to fully appreciate was how much trading activity changes throughout the day. For example, EUR/USD is usually at its busiest during the London–New York overlap, when European and American markets are both open. Liquidity is at its highest, spreads are often at their tightest and trade execution tends to be much smoother. If you're learning to trade, simply focusing on those active market hours can make the experience far less frustrating than trying to trade during quieter sessions with thinner liquidity. The important lesson is that currency pairs don't move randomly. They respond to interest rates, economic data and shifts in investor sentiment, all while being influenced by the time of day and the amount of liquidity flowing through the market. Understanding those drivers helps you make sense of the price action rather than simply reacting to it. Read more: Best time to trade forex: When to enter the market during the day A relatively small number of currency pairs account for most of the activity in the global forex market. According to the Bank for International Settlements (BIS) 2022 Triennial Central Bank Survey, the US dollar appears on one side of the vast majority of all foreign exchange transactions, while the major currency pairs dominate global trading volume. That's a reflection of market liquidity rather than a recommendation of what you should trade. Beginners and professionals alike choose different pairs depending on their strategy and objectives. One thing you'll probably notice is that the top of the table is dominated by major currency pairs. That's no coincidence. High trading volume creates better liquidity, tighter spreads and smoother trade execution, which is exactly why majors remain the preferred choice for most traders worldwide. There's no universal "best" currency pair. The right choice depends on your experience, trading style, appetite for risk and even the hours you're available to trade. What suits a full-time day trader won't necessarily suit someone checking the markets for an hour after work. Here's how I'd generally approach it. If you're just starting out, I'd stick to the major currency pairs, particularly EUR/USD and USD/JPY. There are several reasons why they've remained beginner favourites for years: When I first started trading, I made the mistake of watching far too many charts. Looking back, I'd tell any beginner to pick one or two major pairs and learn how they behave before expanding your watchlist. Once you understand their rhythm, adding more markets becomes much easier. Some traders actively look for volatility because larger price swings can create more trading opportunities. Pairs such as GBP/JPY often produce substantial intraday movement, while some exotic pairs can experience even larger swings during periods of economic or political uncertainty. The trade-off is that bigger opportunities come with bigger risks. One lesson every trader learns eventually is that volatility cuts both ways. The larger the daily range, the smaller your position size should generally be. Chasing excitement is rarely a trading strategy. Your available trading hours should also influence which currency pairs you follow. Trading a currency pair during its busiest session usually means: Trying to trade a pair when its home market is largely asleep often produces the opposite effect. Every trader pays the spread, whether they realise it or not. That's why traders who place lots of trades, particularly scalpers and active day traders, usually gravitate towards major currency pairs, especially EUR/USD. Its exceptional liquidity means brokers can often offer the tightest spreads available. It might only seem like a tiny saving on each trade, but costs add up surprisingly quickly. If you're entering dozens of positions every week, even a slightly wider spread can make a noticeable difference to your overall results. The best currency pair isn't necessarily the one that moves the most. It's the one that matches your experience, your trading plan and the amount of risk you're genuinely comfortable taking. That's a far more sustainable way to approach the market than simply chasing whichever chart happens to be moving the fastest. A currency pair in forex is a quotation showing the value of one currency relative to another, how much of the quote currency it takes to buy one unit of the base currency. Every forex trade involves buying one currency while simultaneously selling the other. The seven major currency pairs are EUR/USD, USD/JPY, GBP/USD, USD/CHF, AUD/USD, USD/CAD and NZD/USD. Each includes the US dollar and together they account for the majority of global forex trading activity. Buying a currency pair means you're buying the base currency while selling the quote currency. You're expecting the base currency to strengthen relative to the quote currency, causing the pair's price to rise. Major currency pairs, particularly EUR/USD, USD/JPY and GBP/USD, are generally the best starting point for beginners. They offer high liquidity, tight spreads and plenty of educational resources, making them easier to understand than thinner, more volatile markets. EUR/USD is usually the cheapest currency pair to trade because it typically has the tightest spreads in the forex market. USD/JPY is also known for relatively low trading costs, while major pairs are generally cheaper to trade than minor or exotic pairs. Most beginners are better off focusing on one or two currency pairs rather than trying to monitor the entire market. As your experience grows and you develop a consistent trading strategy, you can gradually expand your watchlist. Generally, yes. Exotic pairs tend to have wider spreads, lower liquidity and greater price volatility, making them more challenging to trade. Most new traders will find it easier to build confidence by starting with the major currency pairs. Not exactly. Exchanging money is usually a one-off transaction for travel or business, whereas trading a currency pair involves speculating on whether one currency will strengthen or weaken relative to another in an attempt to make a profit. A currency pair is the foundation of every forex trade. Rather than buying or selling a single currency, you're always comparing the value of one currency against another. Understanding the relationship between the base currency and the quote currency is the first step towards reading charts, interpreting market movements and making informed trading decisions. It's equally important to understand that not all currency pairs behave the same way. Major pairs offer the highest liquidity, the tightest spreads and are generally the most suitable place for beginners to start. Minor (cross) pairs provide opportunities to trade the relationship between major economies without involving the US dollar, while exotic pairs can deliver larger price swings but usually come with higher costs and greater risk. After years of trading, one thing has become clear to me: there isn't a single "best" currency pair. The right choice depends on your experience, your trading strategy, your tolerance for risk and even the hours you're available to watch the market. Finding the pair that suits your style is far more important than simply choosing the one that's making the biggest headlines. Once you've got a solid understanding of currency pairs, the next logical step is learning the building blocks that sit alongside them, concepts such as spreads, pips and market liquidity. Together, they form the core language of forex trading and will make everything else you learn much easier to understand. Lee W. is a seasoned professional trader with over 10 years of experience. Passionate about sharing valuable expertise and unique market insights, Lee W. now serves as an external and independent market analyst for RADEX MARKETS. Reviewed by RADEX MARKETS Risk Warning: Trading derivatives and leveraged products carries a high level of risk, including the risk of losing substantially more than your initial investment. Related concepts:

One of the best quotes I recently heard about oil is by the legendary Tommy Norris (Google his name if you are not quite on the same page), it goes like this……. OIL. “Good and bad don't factor into this. Our great-grandparents built a world that runs on this stuff, right here. Until it starts running on something else, we got to feed it, or the world stops. There is an alternative. You can throw your phone away and trade that Mercedes in for a bicycle or a horse and start hunting your own food and living in a tent, but you'll be the only one and it won't make a damn bit of difference. Plus, I hear the moral high ground gets really windy at night.” If you trade forex and don’t pay attention to oil prices, you’re effectively ignoring one of the most powerful macroeconomic forces on the planet. Oil is not just another commodity ticking away on a chart, it is a foundational input for global growth, inflation, trade balances, and monetary policy. Currencies respond to economic pressure. Oil creates that pressure. When oil prices spike, inflation rises, costs surge, and central banks start paying attention. When oil prices collapse, entire economies wobble, currencies weaken, and producers start switching off supply. Forex traders who understand this relationship don’t just see price movement, they understand why it’s happening. In this article, we’ll explore why oil prices matter in forex trading, examine real-world examples of oil price spikes driven by global tensions, and explain what happens to oil production, and currencies, when prices fall below $60 per barrel. Oil sits at the heart of modern civilisation. It fuels: Because oil feeds into almost every layer of economic activity, changes in oil prices quickly affect: Forex markets are forward-looking. They price what the economy will look like, not what it looks like today. Oil prices provide one of the clearest early signals of those future conditions. The Direct Link Between Oil and Forex Markets Forex traders focus on: Oil affects every single one of these. When oil prices rise, inflation usually follows. When inflation rises, central banks are pressured to tighten monetary policy. When policy tightens, currencies move. Oil doesn’t just influence forex indirectly; it sits right at the core of macro currency pricing. Oil Is Priced in US Dollars – A Critical Forex Mechanism One of the most important oil–forex relationships is with the US dollar. Oil is traded globally in USD, which means: This creates a powerful but often misunderstood link between oil and major currency pairs. During periods of high oil volatility, moves in: often accelerate as global capital adjusts to changing energy costs. Oil-Exporting vs Oil-Importing Currencies Oil price changes do not affect all currencies equally. When oil prices rise, exporting nations often see: This tends to support their currencies. Key oil-linked currencies include: Canada is the classic example. Oil exports form a significant part of the Canadian economy. When oil prices rise, USD/CAD often falls as CAD strengthens. Oil-Importing Countries (Often Hurt by Rising Prices) Countries that rely heavily on imported energy face rising costs when oil prices increase. This can: Currencies commonly affected include: Oil price spikes are rarely random. They are usually driven by fear of supply disruption, not actual shortages. The Middle East controls a significant portion of global oil supply. Any escalation in the region sends shockwaves through energy markets. Examples include: Even the threat of disruption to the Strait of Hormuz, through which around 20% of the world’s oil passes, is enough to send oil prices sharply higher. For forex traders, these moments often create: Russia is one of the world’s largest oil and energy exporters. When the Russia–Ukraine conflict escalated: This had immediate forex consequences: Oil was a major transmission mechanism from geopolitics into forex markets. Oil price spikes also occur when OPEC unity fractures. Disagreements between major producers, such as Saudi Arabia and Russia, can: OPEC meetings are effectively macro events for forex traders, especially those trading USD/CAD or emerging-market currencies. Oil prices have spiked following: Markets react instantly. Oil prices rise first; currencies adjust second. Oil prices can also fall dramatically, sometimes faster than they rise. When growth slows: Oil prices often act as an early warning sign of economic trouble. Forex markets take note. Oil producers don’t always coordinate well. Oversupply can occur when: When supply overwhelms demand, oil prices don’t drift lower, they collapse. This is a critical level for both oil markets and forex traders. The $60 Threshold Matters While exact break-even levels vary, $60 per barrel is widely seen as a psychological and economic tipping point. Below this level: Impact on Oil Production When oil prices fall below $60: Producers with higher extraction costs, such as shale oil and offshore drilling, may: This reduces future supply, often planting the seeds for the next oil price rebound. Oil production is capital intensive. Low prices mean: This doesn’t affect supply immediately, but it creates supply constraints later. Many oil-exporting countries rely on oil revenue to fund public spending. Below $60: This is why prolonged low oil prices often coincide with weakness in CAD, NOK, and emerging-market currencies. Forex Implications of Sub-$60 Oil For forex traders, low oil prices usually mean: Oil-Exporting Currencies: Oil-Importing Currencies: However, if oil falls due to a global slowdown, risk-off sentiment can overwhelm these benefits. Context always matters. Oil, Inflation, and Central Banks Oil prices feed directly into inflation. Rising Oil Prices: Falling Oil Prices: Central banks watch oil closely, and so should forex traders. How Forex Traders Can Use Oil in Practice You don’t need to trade oil directly. Smart forex traders: Oil provides context, it explains why currencies are moving. Final Thoughts: Oil Is a Macro Driver You Cannot Ignore Oil prices influence inflation, growth, trade balances, and central bank decisions, the foundations of forex pricing. Understanding oil won’t make you perfect but ignoring it will eventually make you wrong. Because when oil moves aggressively, forex markets rarely stay quiet for long. And a final word from our friend Tommy Norris: “We have a 120-year petroleum-based infrastructure. Our whole lives depend on it. And, hell, it's in everything. The roads we drive on The wheels on every car ever made, including yours. It's in tennis rackets and lipstick and refrigerators and antihistamines. Pretty much anything plastic. Your cell phone case, artificial heart valves. Any kind of clothing that's not made with animal or plant fibres. Soap, even hand lotion, garbage bags, fishing boats. You name it. Everything. And you know what the kicker is? We're gonna run out of it before we find its replacement.”

Silver, platinum and palladium are in complete chaos this morning, with all three metals exhibiting violent, double-digit price swings within hours of the market open. Silver reached all the way to $84 per ounce earlier today, before electing to explore lows of $75. Platinum briefly breached $2,500 at one point, only to dip back down to $2,200. Palladium is equally unstable. Gold has been practically stationary in comparison, incurring only a minor loss so far today. The rallies in precious metals achieved full-on hysteria last Friday, with silver, platinum and palladium all registering double-digit gains. Silver closed the week at $79 per ounce, meaning the white metal has gained $50 since the start of the year. There is no other way to describe the rise in silver other than parabolic, and yet the metal is not alone. Platinum started the year under $900 per ounce; it now stands above $2,400. Palladium, while not quite matching the outrageous performances of silver and platinum, has still doubled this year, from $900 in January to over $1,900 last week. Gold meanwhile had a relatively humble week, gaining around $200 by Friday and registering a fresh record high of $4,550 per ounce. Exuberance aside, some cracks are finally beginning to show for silver. Last week, Elon Musk said the situation in silver markets was “not good”, referring to the key role that silver plays in many industrial applications. The gap between supply and demand continues to widen as miners struggle to keep up, with deficits expected to persist in 2026. Meanwhile, the Chicago Mercantile Exchange has raised the margin requirement for silver futures from $20,000 to $25,000, starting from today. The move effectively limits the leverage on offer, forcing parties to either commit more capital or reduce position size. It is not the first time the CME Group has made such an adjustment, having also done so in 1980 and 2011, among other times. The salient point about the 1980 and 2011 adjustments is that they corresponded to local highs in the silver markets, which would take years to reattain. Adding yet more fuel to the fire, China is expected to impose export controls on silver starting on the first of January 2026. With that said, buyers are still putting pressure on precious metals as of this morning. How the situation resolves is anyone’s guess. The economic calendar is once again devoid of content this week, with the notable exception of the latest FOMC minutes on Tuesday. The transcript should provide some insight into the Fed’s overall sentiment going into next year, but ultimately, few are expecting a rate cut at the end of January. On Wednesday, many markets will close early on New Year’s Eve, although US markets will remain open all day. Markets throughout the world will be closed on New Year’s Day, while Japanese markets will remain shut on Friday as well. In all likelihood, precious metals will dominate the week’s proceedings. #Silver #Platinum #Metals

If you are new to trading then you need to understand everything there is to know about what a pip is, and how they are calculated when you are trading. A pip is the smallest standard unit used to measure movement in a forex quote. It appears in the fourth decimal place for most currency pairs and the second decimal place for Japanese yen pairs. For example, if EUR/USD rises from 1.1506 to 1.1507, it has moved by one pip. That definition is useful, but it is not usually the first thing a trader really wants to know. The more important question is: how much money is that one-pip movement worth? For EUR/USD, the approximate value of one pip in a US dollar account is: This means that a 20-pip movement could be worth $200 when trading one standard lot, but only $2 when trading a micro lot. The price has travelled the same distance in both cases; it is the position size that changes the financial result. JPY currency pairs and gold are calculated differently. Their pip values can also fluctuate with the exchange rate or depend on the platform's contract and quoting convention, so we will cover both separately and include them in the conversion table below. In this guide, we will look at where the pip sits within a forex quote and how its value changes across currency pairs and lot sizes. We will then work through three calculation scenarios, explain the special conventions used for gold and JPY pairs, and show how pips help traders set stop-losses, calculate position sizes and measure risk in actual money. The illustrative EUR/USD quote reflects the market range on 29 July 2026; the ECB's latest available reference rate was approximately 1.15 US dollars per euro. (European Central Bank) A pip is the standard unit used to measure price movement in forex, usually appearing in the fourth decimal place; or the second decimal place for JPY pairs. On EUR/USD, one pip is worth approximately $10 when trading a standard lot and $0.10 when trading a micro lot, although the value varies according to the currency pair and position size. Knowing the pip value is important because it converts a stop-loss distance on a chart into a real monetary amount. Without that calculation, it is difficult to know how much money is actually at risk. Once you understand pip values and position sizing, you can put that knowledge into practice with a Radex Markets trading account. A pip is a standard unit of price movement in forex. The term is short for "percentage in point" and, for most currency pairs, represents a movement in the fourth decimal place. One pip equals 0.0001, or one-hundredth of one percent. Take an illustrative EUR/USD quote of 1.15069. Reading the decimal places from left to right, the digits are 1 tenth, 5 hundredths, 0 thousandths, 6 ten-thousandths and 9 hundred-thousandths. The fourth digit, the 6, occupies the pip position, while the final 9 represents a pipette, which is one-tenth of a pip. There are two important exceptions to remember. JPY currency pairs place the pip in the second decimal position, while gold uses contract and platform conventions that are not completely standardised. We will examine both cases in the dedicated gold and JPY section below. A pip should not be confused with the spread. A pip measures price movement, whereas the spread is the difference between a currency pair's bid and ask prices, expressed in pips. A fuller explanation of trading spreads can be found in our dedicated spread article. Read more：What Is Spread in Forex? Formula, Calculation & Examples The table below gives the answer first. The calculation method, and the reason some pip values remain fixed while others change, will be explained in the next section. Approximate pip values for a US dollar-denominated account, checked on 29 July 2026. The USD/JPY calculation uses an illustrative market rate of approximately 159.90. (Reuters) *The XAU/USD figures assume the common convention that one standard lot represents 100 troy ounces, and a $0.01 price movement is treated as one pip. Gold pip terminology and contract specifications can vary between brokers and platforms. To use the table, find the instrument first and then move across to the column matching your lot size. A trader opening 0.01 lot of EUR/USD, for example, would have an approximate pip value of $0.10. A 20-pip movement would therefore represent approximately $2 before spreads, commission and other trading costs. The 0.01-lot column is particularly relevant to beginners because micro lots allow the effect of each pip to remain relatively small. However, a smaller position does not automatically make a trade sensible; the stop-loss distance and total account risk still need to be calculated. Pip values for EUR/USD and GBP/USD are fixed in a US dollar account because USD is the quote currency. The value for USD/JPY changes as its exchange rate moves. Under the clearly stated XAU/USD contract convention, the dollar value is fixed, although another broker may define a gold pip differently. This is why checking the instrument specification on your own trading platform matters. Pip value is calculated by multiplying the pip size by the number of currency units in the position, then converting the result into the currency of the trading account where necessary. The general formula is: Pip value = pip size × contract units ÷ exchange-rate conversion That formula needs a little context because the final conversion depends on how the currency pair is arranged. If the quote currency is the same as the account currency, no further conversion is required. If the account currency appears first in the pair, the quote-currency result is divided by the exchange rate. Cross pairs require one additional conversion into the account currency. The examples below use standard lots of 100,000 currency units and illustrative exchange rates based on the ECB reference rates published on 4 August 2026. These rates are used to explain the calculation rather than to represent an executable trading price. The simplest calculation involves a US dollar account and a pair in which USD is the quote currency, such as EUR/USD or GBP/USD. Because the result is already denominated in dollars, there is no need to convert it again. For one standard lot of EUR/USD: Pip size: 0.0001 Contract size: 100,000 euros 0.0001 × 100,000 = $10 per pip The calculation produces 10 units of the quote currency. As USD is both the quote currency and the account currency, the pip value is $10. This figure remains fixed for one standard lot regardless of whether EUR/USD is trading at 1.10, 1.15 or another price. The same calculation scales directly with the position size. A 0.1-lot position is worth approximately $1 per pip, while a 0.01-lot position is worth approximately $0.10 per pip. This is why USD-quoted pairs provide the most straightforward pip-value calculation for a dollar-based account. When USD appears first in the pair, the initial calculation produces a value in the quote currency rather than dollars. USD/JPY is a useful example because its pip sits in the second decimal place and the first stage gives the result in Japanese yen. Using an illustrative USD/JPY rate of 157.41, derived from the ECB's euro reference rates on 4 August 2026, the calculation for one standard lot is: Pip size: 0.01 Contract size: 100,000 US dollars First, calculate the pip value in yen: 0.01 × 100,000 = ¥1,000 per pip The ¥1,000 must then be converted into US dollars by dividing it by the USD/JPY exchange rate: ¥1,000 ÷ 157.41 = approximately $6.35 per pip For smaller positions, the same result scales down to approximately $0.64 per pip at 0.1 lot and $0.06 per pip at 0.01 lot. These values move slightly whenever USD/JPY changes because the fixed ¥1,000 pip value is being converted back into dollars at a floating exchange rate. This is the calculation behind the approximate JPY figures in a pip-value table. It is also why assuming that every standard lot is worth exactly $10 per pip can leave a trader with the wrong risk figure. Cross pairs require an extra step because the account currency may not appear anywhere in the pair. The method is to calculate the pip value in the quote currency first and then convert that amount into the currency of the trading account. Consider one standard lot of EUR/GBP held in a US dollar account. The pip size is 0.0001 and the contract contains 100,000 euros: 0.0001 × 100,000 = £10 per pip The initial pip value is £10 because GBP is the quote currency. It must now be converted into dollars. On 4 August 2026, the ECB reference rates were approximately EUR/USD 1.1515 and EUR/GBP 0.85639, giving an illustrative GBP/USD cross rate of: 1.1515 ÷ 0.85639 = approximately 1.3446 US dollars per pound The final conversion is therefore: £10 × 1.3446 = approximately $13.45 per pip At 0.1 lot, the approximate value would be $1.35 per pip, while at 0.01 lot it would be roughly $0.13 per pip. If the account were denominated in pounds, the calculation would stop at £10 because no further currency conversion would be needed. Most modern trading platforms calculate pip values automatically, and nobody receives a medal for doing every sum by hand. The practical value of understanding the formula is that you can check whether the platform figure, position size and cash risk all make sense before placing the trade. Pip calculations for gold and Japanese yen pairs often cause confusion because neither follows the four-decimal format used by pairs such as EUR/USD. Gold deserves particular care because XAU/USD has no single, universally accepted pip definition: some brokers treat a $0.01 movement as one pip, while others use $0.10. For this reason, traders should always check the contract specification shown on their own platform. A confident-looking calculation is not much use if it is based on a different broker's definition. Gold is usually traded as XAU/USD, with the price showing how many US dollars are required to buy one troy ounce of gold. On many MT4 and MT5 accounts, one standard lot of XAU/USD represents 100 troy ounces. Using the common convention that a $0.01 movement equals one pip, the standard-lot calculation is: $0.01 × 100 ounces = $1 per pip If gold rises from $4,062.05 to $4,062.06, that is a $0.01 movement. At one standard lot, the movement would be worth $1. For a 0.01-lot position, the contract represents one ounce: 100 ounces × 0.01 lot = 1 ounce The pip-value calculation is therefore: $0.01 × 1 ounce = $0.01 per pip Under this convention, a 50-pip movement, equivalent to a $0.50 change in the gold price, would be worth $0.50 at 0.01 lot. Some platforms instead describe a $0.10 gold movement as one pip. Under that convention, one pip would be worth $10 at one standard lot and $0.10 at 0.01 lot. The underlying profit or loss does not change; only the terminology used to describe the movement does. This is why the safest approach is to check three details before trading gold: Gold was trading around $4,062 per ounce when these examples were prepared on 31 July 2026, although the calculation works in exactly the same way at other market prices. (Reuters) JPY currency pairs are normally quoted to two or three decimal places. The second decimal position is the pip, while the optional third decimal represents a pipette. Consider USD/JPY moving from 159.90 to 160.20: 160.20 − 159.90 = 0.30 Because one pip in a JPY pair equals 0.01: 0.30 ÷ 0.01 = 30 pips USD/JPY has therefore risen by 30 pips. If the platform displayed the prices as 159.900 and 160.200, the third decimal would show pipettes, but the movement would still equal 30 full pips. In a USD account, the cash value of a USD/JPY pip is usually lower than the familiar $10-per-pip value of EUR/USD at one standard lot. The reason is that the initial pip value, ¥1,000 at a standard lot, must be converted back into US dollars at the current USD/JPY rate. As the exchange rate changes, so does the dollar value of that ¥1,000. For this reason, the pip value of a JPY pair should be checked rather than assumed before calculating a position size. A pip is the standard unit used to describe price movement in forex. It normally sits in the fourth decimal place for most currency pairs and the second decimal place for JPY pairs. A pipette is one-tenth of a pip. It appears in the fifth decimal place on most pairs or the third decimal place on JPY pairs. Many trading platforms display this final digit in smaller or superscript text to distinguish it from a full pip. For example, if EUR/USD moves from 1.15060 to 1.15061, the change is one pipette rather than one full pip. Ten movements of this size would equal one pip. The term point can be less consistent. On many forex platforms, a point means the smallest price increment displayed, which is usually the same as one pipette on a five-decimal quote. In stock-market language, however, one point normally means a full one-unit movement in the quoted price, such as an index rising from 7,500 to 7,501. In simple terms, traders usually discuss market distance in pips, while platforms may use points or pipettes to display more precise pricing. Checking how your platform defines a point prevents a tenfold error when entering a stop-loss or interpreting an automated trading rule. Pips become useful when they are converted from a measure of market movement into a measure of financial risk. Traders can use them to define a stop-loss distance, calculate an appropriate position size and compare the potential reward with the amount being risked. A stop-loss should not be placed at an arbitrary distance simply because the number looks comfortable. The stop should first be positioned according to the market structure or trading setup, with that distance then measured in pips and converted into money. Suppose a trader buys EUR/USD at 1.1500 and places a stop-loss at 1.1475: 1.1500 − 1.1475 = 0.0025 0.0025 ÷ 0.0001 = 25 pips The stop-loss distance is therefore 25 pips. If the trader opens a 0.1-lot position, each pip is worth approximately $1: 25 pips × $1 per pip = $25 Ignoring slippage, the spread and any commission, approximately $25 is at risk if the stop-loss is triggered. This is the point of converting the stop into pips: a line on a chart becomes an amount of money that can be compared with the account balance. Position sizing determines how many lots can be traded without exceeding a chosen monetary risk. The correct formula is: Position size in lots = risk amount ÷ (stop-loss distance in pips × pip value per standard lot) The brackets matter. The stop distance must be multiplied by the pip value before the risk amount is divided by the result. Consider this illustrative example: First, calculate the amount that would be at risk when trading one standard lot: 40 pips × $10 = $400 Next, divide the permitted risk by that amount: $100 ÷ $400 = 0.25 lots The calculated position size is therefore 0.25 lot. At this size, each pip is worth approximately $2.50: $10 × 0.25 = $2.50 per pip A 40-pip loss would then equal: 40 × $2.50 = $100 The calculation brings the example back to the original 1% risk limit. In practice, the precise tradable volume may need to be rounded down to the nearest increment supported by the platform. I run every potential trade through this pips-to-money conversion before placing it. Position size is calculated from the permitted risk; it is never something I decide by feel because the setup "looks good". A profit target can also be measured in pips. Comparing the target distance with the stop-loss distance gives the trade's potential risk-reward ratio: Risk-reward ratio = target distance in pips ÷ stop-loss distance in pips If a trade has a 40-pip stop-loss and an 80-pip profit target: 80 ÷ 40 = 2 The potential reward is twice the amount at risk, giving a 2:1 reward-to-risk ratio. In the previous example, risking $100 would therefore correspond to a potential gross profit of approximately $200. A 2:1 ratio is a commonly discussed benchmark, but it should not be forced onto every setup. Market structure, volatility, trading costs and the realistic probability of reaching the target all matter. A large target is not automatically better if price is unlikely to reach it. These calculations also exclude the possible effects of spread widening, commission, overnight charges and slippage. The final loss can therefore differ slightly from the simple pip calculation, particularly in fast-moving or illiquid markets. The principles behind choosing a technically sensible stop are covered in our stop-loss guide, while the broader process of selecting and testing a trading approach is explained in our forex strategy guide. Read more：What is a stop-loss order and how to set it Read more：Best trading strategy guide: What every trader needs to know The answer depends on the platform convention: some brokers define a $0.01 gold movement as one pip, while others use $0.10. If one standard lot represents 100 ounces, every $0.01 movement is worth $1 per standard lot or $0.01 at 0.01 lot. It depends on the currency pair and lot size. For a USD-quoted pair such as EUR/USD, $1 represents 10 pips at 0.01 lot, while at one standard lot, $1 is equal to only 0.1 pip. For USD-quoted pairs such as EUR/USD and GBP/USD, one pip is worth approximately $0.10 at 0.01 lot. JPY pairs and gold use different calculations, as shown in the conversion table above. For most forex pairs, 100 pips represents 0.0100, which is one cent of exchange-rate movement. Its monetary value still depends on the contract size; for example, 100 pips on EUR/USD is worth approximately $10 at 0.01 lot but $1,000 at one standard lot. A pip is the standard unit traders use to describe forex price movement. A point usually means the smallest increment displayed by a platform, often one pipette or one-tenth of a pip, although terminology can vary. "Pips" is the plural of pip, the standard unit used to measure movement in forex prices. On EUR/USD, one pip is worth approximately $10 at one standard lot, with values for other lot sizes shown in the conversion table. Pips are units used by forex traders to describe the distance a price has moved. A 50-pip rise means the market has advanced by 50 standard units, but the cash value depends on the pair and position size shown in the table above. No. Most currency pairs use the fourth decimal place as one pip, while JPY pairs use the second decimal place, and gold follows broker-specific platform and contract conventions. A pip is the unit that converts forex price movement into real money. The three things to remember are where the pip sits in the pair's quote, what one pip is worth at your chosen lot size, and how much your stop-loss distance represents in cash. The conversion table offers a quick reference, while the formula allows you to verify the figure by hand whenever necessary. For me, a moving quote is just a stream of numbers until it is multiplied by the pip value. Establish what every pip is worth first; then you can begin talking sensibly about risk, position size and trading strategy. Lee W. is a seasoned professional trader with over 10 years of experience. Passionate about sharing valuable expertise and unique market insights, Lee W. now serves as an external and independent market analyst for RADEX MARKETS. Reviewed by RADEX MARKETS Risk Warning: Trading derivatives and leveraged products carries a high level of risk, including the risk of losing substantially more than your initial investment. Related concepts:

It may have taken seventeen years, but platinum has finally beaten its long-standing record high established back in 2008, pushing beyond $2,300 per ounce as of this morning. The precious metal has gained a staggering $700 over the last two weeks and is now up 160% since the start of the year, beating the rallies in gold and silver. Speaking of which, gold ventured over the $4,500 mark earlier today, exploring new territory and adding another significant milestone to this year’s accomplishments. Silver meanwhile blasted through $70 per ounce yesterday, closing the day over $71 per ounce and pushing even higher this morning. Precious metals have exceeded all expectations this year, and continue to surprise even the most fervent of gold bugs. With one week to go before the end of the year, the question on everyone’s mind is how much higher metals can go in 2025. The latest US GDP figures, published yesterday, revealed that the American economy grew by 4.3% in the third quarter – the fastest rate of growth in two years. The acceleration was largely driven by consumer spending, but also by a smaller trade deficit due to an increase in US exports. The data thoroughly outpaced economists’ predictions of 3.3% and came as a pleasant surprise to US stocks, pushing the S&P 500 to a fresh record high. The latest figures carried over to the crude oil markets, which are in the midst of a rebound following last week’s lows. The Brent benchmark crept back over $62 a barrel yesterday, while WTI managed to reclaim $58. #Platinum #Gold #SPX

Precious metals are pumping across the board. Gold wasted no time pumping straight to $4,400 per ounce this morning, surpassing its previous record high established back in October. It was not alone. Silver reached all the way up to $69 per ounce within hours of the opening bells across Asia, pushing even further into record high territory. The white metal is up a staggering 140% since the start of the year, and is by no means alone. After breaching $2,000 last Friday, platinum blasted straight out of the gate this morning, moving up to $2,100 per ounce. Platinum is up over 130% since January and is now only $200 away from beating its previous all-time high of $2,300 per ounce, recorded back in 2008. As if that were not enough, palladium also continued its ascent this morning, reaching to $1,850 and beyond, meaning the metal has joined silver and platinum in doubling since the start of the year. The drama in precious metals appears to be relatively self-contained for the time being, with markets further afield remaining unaffected. Christmas is only a few days away, and the economic calendar is as barren as one would expect. With regard to the US economy, Tuesday has a couple of meagre offerings in the form of the ADP employment change and heavily delayed Q3 GDP figures, while the latest jobless claims arrive early this week on Wednesday. Other than that, there is very little to whet the appetite this week; the earnings calendar is equally mundane. With the Christmas break just around the corner, traders understandably have their sights on matters closer to home. Markets around much of the world will shut down on Thursday and Friday for Christmas and Boxing Day, while US markets will close for half a day on Wednesday but reopen on Friday. #Gold #Silver #Metals