Tight spreads as low as 0.6 pips on all major currency pairs
To keep spreads as narrow as possible, XM aims to get optimal prices from all the liquidity providers. Real-time prices are aggregated from liquidity providers in order to offer best bid and ask prices to clients. XM’s electronic pricing engine allows XM price updating on every currency pair three times per second, and thanks to this XM’s prices reflect the current global forex market levels.
XM operates with variable spreads, just like the interbank forex market. Because fixed spreads are usually higher than variable spreads, in case you trade fixed spreads, you will have to pay for an insurance premium.
Many times, forex brokers who offer fixed spreads apply trading restrictions around the time of news announcements – and this results in your insurance becoming worthless. XM imposes no restrictions on trading during news releases.
What is Spread? Pips?
A point is the smallest unit of price change. A point is usually the last decimal place in a quote
In this article, we’ll introduce you to the concept of Pip – what it is and how to use it. How pips are calculated and used in trading currency pairs. XM will explore together in this article.
- What is a pip in forex trading?
- How to calculate points?
- Forex point example?
Pips and points explained
Pip is an acronym for “percentage in point” – a standardized unit of change in the price of a trading instrument. 1 point is the fourth decimal place, which is 0.0001.
Investors interested in foreign exchange trading, understanding what a point is, is an important factor in analyzing currency and market movements. It helps traders determine the overall cost and profit incurred by the trade.
Most currency pairs are accurate to 4 decimal places, and the pip is the change in the last decimal point.
- For currency pairs displayed to 4 decimal places, 1 pip = 0.0001
- Only for currency pairs whose quoted currency is Japanese yen, and the exception of “precious metals”, only two decimal places are displayed, one point = 0.01
Quotes for most currency pairs, such as GBP/USD, are accurate to 4 decimal places (1 pip = 0.0001), and on the platform to 5 decimal places (1 technical pip = 0.00001). Spreads on the company’s website, order distance and Other parameters and even quotes are accurate to 0.00001. For the Japanese yen and precious metals, 1 point = 0.01, while the technical point is 0.001.
Take GBP/USD as an example. Understand the situation when the price changes by 1 point.
Suppose the currency pair is currently quoted at 1.32711. If the price changes from 1.32711 to 1.3271 2, it means an increase of 1 technical point. If the price changes from 1.32711 to 1.32710, it will decrease by 1 technical point.
USD/JPY: A 1-point change, is the price changed from 112.90 to 112.91, because the second decimal place has changed by 1.
The pip value of 1 pip is expressed in the quote currency (the second currency in the currency pair).