Spread, Pips, Ticks, and Points
- Spread - The forex spread is the difference between a forex broker's sell rate and buy rate when exchanging or trading currencies. Spreads can be narrower or wider, depending on the currency involved, the time of day a trade is initiated, and economic conditions.
- A Pip represents the change in value between two currencies. For example, if the EUR/USD moves from 1.2250 to 1.2251 it has moved by 0.0001 or one Pip (1.2251 – 1.2250 = 0.0001).
- A Tick is the smallest increment an individual instrument can move. It is like a Pip, but it may not measure every increment equally. For example, a tick on one instrument may be measured in increments of 0.0001, whereas another instrument may be measured in increments of 0.25.
- A Point is a shift in the dollar amount. For example, if a share price went from $25 to $30, traders would say it has moved 5 points. For FX, a point is used to refer to the 5th decimal place. Please note: On the MT4 platform, spreads are shown in Points. 1 pip is equivalent to 10 points.
Please consult our Pip Calculator for additional reference.