Monday, November 2, 2009

3.7 Forex Lexicon : Pips

A pip is the smallest unit of price for any foreign currency.
Nearly all currency pairs consist of five significant digits and most pairs
have the decimal point immediately after the first digit, that is,
EUR/USD equals 1.2812. In this instance, a single pip
equals the smallest change in the fourth decimal place, 

that is, 0.0001. 
Therefore, if the quote currency in any pair is USD, then one pip 
always equals 1⁄100 of a cent. One notable exception
is the USD/JPY pair where a pip equals $0.01 
(one U.S. Dollar equals approximately 107.19 Japanese Yen). 
Pips are sometimes called points.


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