1. Pip is defined as smallest price change that a given exchange rate can make. In Forex market, prices are quoted in pips. Pip stands for "percentage in point" and is the fourth decimal point, which is 1/100th of 1%.
2. Most major currency pairs are priced to four decimal places and the smallest change allowed is that of the last decimal point and for most pairs it is equivalent to 1/100th of one percent, or one basis point.
3. For E.g. in EUR/USD, a 3 pip spread is quoted as 1.2500/1.2503
4. Exception proves the rule and among the major currencies, the only exception to that rule is the Japanese yen.
5. For E.g. In USD/JPY, the quotation is only taken out to two decimal points (i.e. to 1/100 th of yen, as opposed to 1/1000th with other major currencies. In USD/JPY, a 3 pip spread is quoted as 114.05/114.08.
2. Most major currency pairs are priced to four decimal places and the smallest change allowed is that of the last decimal point and for most pairs it is equivalent to 1/100th of one percent, or one basis point.
3. For E.g. in EUR/USD, a 3 pip spread is quoted as 1.2500/1.2503
4. Exception proves the rule and among the major currencies, the only exception to that rule is the Japanese yen.
5. For E.g. In USD/JPY, the quotation is only taken out to two decimal points (i.e. to 1/100 th of yen, as opposed to 1/1000th with other major currencies. In USD/JPY, a 3 pip spread is quoted as 114.05/114.08.
