What is a pip?
In this video we will be looking at what a Pip is. You may have heard this word before if you have been in and around trading but what are they? A pip is typically defined as the smallest movement and exchange rate one can make. Most currency pairs, like GBPUSD, are quoted to the fourth decimal place. For example 1.5485 A one pip movement on GBPUSD using this quote price would move GBPUSD to 1.5486 Likewise, if the price changes from 1.5485 to 1.5484 This represents a decrease in one pip. Not all pairs are quoted to the fourth decimal place, like in the case of the USDJPY, this currency pair is quoted to the second decimal place. For example 90.73 A one pip movement on USDJPY using this quote price would move USDJPY to 90.74 In some exchanages you will come across fractional pip pricing. This is essentially adding in another decimal place to the quoted price. For example, 1.5485 quoted on USDJPY would display as 1.54856 This just means the quotes are more precise whilst it also gives traders lower transaction costs.