Nickel

DEFINITION of 'Nickel'

A slang term meaning five basis points, or five pips. A nickel is the equivalent of 5/100th of 1%, or 0.05%. In forex, basis points are typically used to denote interest rate changes made by a central bank and changes in the value of a given currency over the course of a trading session.

BREAKING DOWN 'Nickel'

Forex rates are usually expressed in whole number format, and use four decimal points instead of fractions for remainders. For example, the USD/EUR currency pair is quoted at 1.2512. A nickel adjustment upward would increase the quote by 0.0005, since each basis point is worth 0.0001. The new rate would be 1.2517.

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