LESSON 7. Quotes: pips and big figures
On Forex market, the value of a currency is given in pips.
Pip is an acronym of “Percentage in Point”. It represents the smallest change an exchange rate can make.
Most currencies are quoted to four numbers after the point, so one pip equals to 1/100 of a percent (0.0001).
If EUR/USD changed from 1.0800 to 1.0805, this would be a change of 5 pips.
For currency pairs including Japanese yen, the pip value is the 2nd number after the point. If USD/JPY changed from 120.00 to 120.03, this would be a change of 3 pips.
Exchange rates are usually quoted to 5 figures. The first three digits of the quote are called the big figure.
Note that some Forex brokers also count the 5th and the 3rd decimal places respectively. They are called "pipettes" and make the spread calculation more flexible.