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Can there be any false pips?
3 Answers
<p>Some brokers do not offer the normal two-point to three-point spread in the EUR/USD but spreads of seven pips or more. (A pip is the smallest price move that a given exchange rate makes based on market convention. Since most major currency pairs are priced to four decimal places, the smallest change is that of the last decimal point.) Factor in four or more additional pips on every trade, and any potential gains resulting from a good trade can be eaten away by commissions, depending on how the forex broker structures their fees for trading.</p>
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<p id="isPasted">Trading costs continue to decline each year as forex brokers compete to win you as a client and now even offer zero spread trading accounts as an extra enticement.</p><p>Be aware: Some zero spread account offerings can be marketing gimmicks to lure you in as a trader. It's therefore important to be able to read the fine print and understand what to look for when deciding which broker to choose.</p>
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<p>A pip, which stands for "percentage in point" or "price interest point," indicates the basic market movement of a currency pair. For example, in price quotes for GBP/USD, a pip is equal to 1/100 of a percentage point, or one basis point. Generally, pips are counted in the fourth place after the decimal. However, there are exceptions. For instance - a pip is one percentage point in two currencies involving the Japanese yen. All pips are considered after the decimal in price quotes.</p>
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