Description:

You may be familiar with the stock market, where changes in price are measured in pennies. Well, in forex, the change in price between two currencies is measured in pips. They are used to calculate transaction costs, as well as profits or losses. A single pip is equivalent to one basis point or one-hundredth of a percent. In most forex pairs, the pip is the fourth decimal place of a price quote, except for those that include the Japanese yen as a quote currency. In these cases, the pip is the second decimal place of a price quote.