In the 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% or one basis point.

In EUR/USD, a 3 pip spread is quoted as 1.2400/1.2403

This standardized size helps to mitigate huge losses. For example, if a pip was 10 basis points, a one-pip change would cause more extreme volatility in currency values.

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