What Is One Pip in BTC/USD?
One pip in Forex is the smallest possible price change that a currency pair could make. Generally, one pip for currency pairs is 0.0001. It’s calculated by looking at the last number past the decimal point, and most pairs focus on the last four decimal places. Therefore, the smallest change would be one percent.
However, when you are dealing with Japanese Yen, gold, silver, or cryptocurrency, one pip is just 0.01. Therefore, if the BTC/USD price sits at 1.23, that three in the second decimal place represents three pips.
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How to Measure Pips in BTC/USD
It’s important to understand the type of lot size you’re working with when measuring pips for BTC/USD. You must also know the pip value. However, you learned that earlier. The pip value for one unit of BTC/USD is $0.01. Therefore, in a standard lot of 100,000 units, the pip measurement is $1,000. That lowers to $100 for mini lots (10,000 units) and $10 for micro lots (1,000 units).
How to Calculate Pips for Bitcoin
Traditionally, pip values remain the same when trading USD currency and another pair. However, Bitcoin fluctuates, so the current market rate will change over time. Therefore, you should calculate the pip value with this formula: Pip value equals one pip divided by the exchange rate multiplied by the lot size.
Overall, it depends on how many BTC units there are in one lot. If one lot holds 10 BTC units, a pip is $0.10. However, if one lot holds 100 BTC units, one pip would be $1.
You can also look at it like this:
With a volume of 1 BTC, one pip equals $0.1. For each dollar movement in the pair, you see a 10-pip jump.
With a pip size of 0.01, Bitcoin’s price of 111.54169, and a standard lot size, you would have this formula: (0.01 / 111.54169) * 100,000, which equals a pip value of $8.97.
Using a Pip Calculator for Accurate Calculations
It’s often wise to use a pip calculator to determine the pip value because human error can mess things up significantly. For example, if you used the wrong Bitcoin price, you’re making Forex trades with incorrect information. This might lead you to significant losses instead of gains.
How to Count Pips in BTC/USD
You count pips for BTC/USD by knowing the pip change and checking the numbers. Since one pip change for this pair is 0.01, you must look at the second (last) number after the decimal point to tell you how many pips you have. For example, if things started at 1.00 and moved to 1.03, you have three pips.
Conclusion
Forex trading is often seen as complicated because there are so many formulas and calculations to make. However, it gets easier as you continue practicing, and you can even find pip calculators to help you find pip values and much more.
