Point
A unit of price movement. In forex, often synonymous with a pip; in indices, the minimum price increment.
A point is a standard unit of measurement for price changes in financial markets. In forex, a point typically refers to a pip (0.0001 for most pairs). In stock indices, a point is one whole unit of the index value. The meaning varies by instrument, so traders must understand what a point represents to size positions and calculate risk correctly.
How It Works
- In forex, one point usually equals one pip (0.0001 for most pairs, 0.01 for JPY)
- Some brokers quote fractional pips (five decimals), where one point = 0.00001 (a pipette)
- In stock indices like the S&P 500, one point equals one unit of the index price
- The monetary value of a point depends on instrument, lot size, and account currency
Trading Tips
Always check what one point means for the specific instrument you are trading
Use your broker's contract specifications to find the value per point at your standard lot size
When comparing spreads, make sure both brokers are quoting on the same point scale
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