Forex ABCs > Glossary > F > Forex Pips

Forex Pips

Definition

A pip is the “percentage in point,” or the smallest price increment in forex trading. In other words, the basis point or the smallest change of an exchange rate between a currency pair. As forex prices are quoted to the fourth decimal point, a sample EUR/USD (Euro to US Dollar) pair might bid at 1.1823 and offered at 1.1820. In this example, the spread is 3 pips wide. An exception to this rule is the Japanese Yen (JPY), which is quoted only to the second decimal point.

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