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Quote:
"Depending on the size of your account, I thought that
1 PIP is just that, one PIP. On FXCM, a $300 account
gives you a PIP value of $1.00. If the account size
is $2000, then each PIP is worth $10. On up to a
$10,000 to $20,000 account (I am not quite certain of
the actual minimum amount in this category) and your
PIPs are worth $100 each."
Its not account size, but lot size that determines pip
value. The $300 account with FXCM is their "mini"
account and trades $10,000 lots, so a move of one pip,
or .0001 = $1. An account that trades standard $100k
lots would = $10 per pip ($100,000 * .0001). Whatever
the lot size you trade, multiply it by .0001 to get
the dollar value (or whatever the base currency is) of
a pip.
Quote:
"I also understood that the PIP spread is only on the
purchase side; if you buy at, say 1.1780, you would
pay 1.1782 (not 1.17802 and that is only on the
purchase. When you sell, you get the actual quoted
price with no PIP spread."
That just means that you are trading off the bid
portion of the quote. Your broker should be quoting
you both a bid (the price you can sell at) and an
offer (the price you can buy at). If the spread is 2
pips then you would buy for 1.1782 or sell for 1.1780
at the instant of that quote.
I would recommend that you look at Oanda for forex.
They allow you to trade any lot size you want (so for
learning you could trade a single $1 (pip value would
equal 1/100th of a cent). It also allows you to use
very precise positon sizing. If your system calls for
a $73,345 position, you can trade exactly that much,
rather than 7 or 8 mini lots or one full 100k lot that
would not be optimal to risk. In addition to sizing,
they also have the tightest spreads I have seen, with
the EUR/USD usually around 1-1.5 pips (yes, they offer
fractional pips).
Overall, if you are new to forex, then be very
careful. Forex brokers amount to nothing more than
bucket shops since there is no central marketplace or
exchange. This can lead to a lot of shady practices
(requotes, big slippage, stop running, etc). So ask a
lot of questions and do your homework before you trade
big money with anyone.
Best of luck.
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