PIP expands as “percentage in point” and is explained as the smallest increment of trade in Forex.

While talking about Forex market, we know that prices are being quoted to the fourth decimal point.

The alteration in that fourth decimal point is known as 1 PIP and is generally equal to 1/100th of 1%.

Japanese Yen is the only exception among all the countries.

If we consider a currency pair EUR/USD, the EUR is base currency and USD is quoted currency. The

base currency is the currency which is sold to purchase the quoted currency, in order to get profited.

t depends on the retailers that which currency do they want to use but some of the very common

currency pairs used while trading are:

EUR/USD (euro/dollar)

USD/JPY (dollar/Japanese yen)

GBP/USD (British pound/dollar)

USD/CHF (dollar/Swiss franc)

& most common commodity pairs are:

AUD/USD (Australian dollar/dollar)

USD/CAD (dollar/Canadian dollar)

NZD/USD (New Zealand dollar/dollar)

The Currency Pairs described above can be used in different combinations.

For example, EUR can be used with JPY and vice versa.

Arbitrage is a term, used in a process where a security or commodity is bought from one market and

then is sold to another market at the same time by earning profit. The concept is that the security is

sold in higher price than that of the buying price. Arbitrage is a kind of benefit earned without

concerning about the risk factor, that’s why used the most by traders/investors.

In every possible way of forex trading, everything is performed via mediators who charge a specific

amount for their services. This charging fee or difference between the bidding prices is known as “forex

spread”.