What is a PIP?

You will constantly see ads for "No Commission" trading - and then they promptly boast their low PIP spreads... But do you have any idea what a PIP actually is?

As Forex Trading there are no exchanges, a PIP is a fancy way of charging you an exchange fee, and saying that you don't have any commissions. Just know this - the Forex firms are not non-profit organizations, so one way or another, they are going to make their money. The best thing to know is that a PIP is their take of the money - and be aware of how they're calculated. The below information explains how to calculate point price (PIP):

All currency pairs can be subdivided into three logical groups - pairs with direct quote (EURUSD, GBPUSD), pairs with inverse quote (USDJPY, USDCHF), and cross rates (GBPCHF, EURJPY etc.).