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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

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What Are Basis Points (BP)?

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Glossary
Reading time: 1 minute(s)
A Basis Point measures the change in interest rates and other percentages. Find out more about it in this article.
  • A Basis Point measures the change in interest rates and other percentages.
  • They are often referred to as "Beeps".

A BP is equal to 0.01%, and therefore if we refer to the example of the Federal Reserve, which for example plans to increase interest rates by 25 basis points, then this indicates that there would be an increase of 0.25%.

Basis points are also used for loans and bonds. For example, your bank may offer you the possibility of receiving a reduction of 50 basis points on your loan, which simply means that the bank will reduce the current interest rate on your loan by 0.5%.

On the other hand, if you know that the yield on a bond will decrease by 100 basis points, then it means that its yield will lose 1%.

This content has been created by XTB S.A. This service is provided by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. XTB S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.

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