The smallest possible price change in a currency pair. Usually, the pip is located in the fourth place after the decimal point and is equal to 1/100th of a percent. For Japanese Yen pairs, the pip is located in the second place after the decimal point (1%).
The unit of price change for bonds (1%), futures (0.01%), shares ($1) and mortgage fees (1% of the principal).
An open trade or transaction. A position can be long (a contract to buy the asset) or short (a contract to sell the asset).
The ratio between the price of one share and earnings per share, used to evaluate a company’s profitability.
An option to sell an underlying asset at a predetermined (“strike”) price upon expiration. An option is paid for up front by the option buyer at a rate defined as a “premium”, which is received by the option seller. The premium should not be confused with the asset’s current market price and future strike price.