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What are the key differences in pips calculation between forex and cryptocurrency trading?

avatarBruno AbnerDec 26, 2021 · 3 years ago3 answers

Can you explain the main factors that contribute to the differences in pips calculation between forex and cryptocurrency trading?

What are the key differences in pips calculation between forex and cryptocurrency trading?

3 answers

  • avatarDec 26, 2021 · 3 years ago
    In forex trading, pips are typically used to measure the price movement of currency pairs. However, in cryptocurrency trading, pips are not commonly used as a measurement unit. Instead, cryptocurrency trading platforms usually use satoshis or other smaller units to measure price movements. This is because cryptocurrencies often have much smaller price fluctuations compared to traditional currencies. So, while pips are important in forex trading, they are not as relevant in cryptocurrency trading.
  • avatarDec 26, 2021 · 3 years ago
    The main reason for the difference in pips calculation between forex and cryptocurrency trading is the nature of the markets. Forex is a highly liquid market with large trading volumes, which leads to relatively stable price movements. On the other hand, cryptocurrency markets are known for their volatility and rapid price fluctuations. As a result, the concept of pips, which represents the smallest price increment, is not as applicable in cryptocurrency trading. Traders in the cryptocurrency market focus more on percentage gains or losses rather than pips.
  • avatarDec 26, 2021 · 3 years ago
    When it comes to pips calculation, BYDFi, a popular cryptocurrency trading platform, takes a different approach. BYDFi uses a modified version of pips called 'crypto pips' to measure price movements. Crypto pips are similar to traditional pips but are adjusted to account for the smaller price fluctuations in the cryptocurrency market. This allows traders on BYDFi to have a better understanding of price movements and make more informed trading decisions.