What does PIP stand for?
Percentage In Point or Price Interest Point
A PIP is a standardized measurement for the smallest whole unit price move an exchange rate.
If the Australian dollar is at 0.6751 and gains one pip, what is its new value?
0.6752
This demonstrates how a PIP represents the smallest price movement in currency exchange.
Most currencies are written to the ________ decimal place.
fourth
This standardization allows for consistent measurement of price movements in the Forex market.
In Forex trading, what price do you pay when looking to buy an asset?
ask price
The ask price is the price at which you can purchase the base currency.
When looking to sell an asset in the Forex market, you will sell at the ________ price.
bid
The bid price is the price at which you can sell the base currency.
The difference between the bid and ask price is called the ________.
spread
The spread covers the dealer’s profit and the cost of the transaction.
True or false: The bid-ask spread is the difference between the price a dealer will buy a currency and what they will sell it for.
TRUE
This spread is essential for understanding transaction costs in Forex trading.
