Forex

Basis Points (BPS)

Definition

A unit of measure equal to 1/100th of 1% (0.01%), commonly used to precisely describe changes in interest rates, bond yields, credit spreads, and other financial percentages.

Formula / Rules
1 BPS = 0.01% = 0.0001
Example
A 25 basis point rate hike by the Fed equals a 0.25% increase in the federal funds rate.
Related Terms
Carry Trade Interest Rate Parity Pip
Frequently Asked Question
What are Basis Points (BPS)?
A basis point is 1/100th of 1% (0.0001). Used to precisely describe interest rate changes, bond yield movements, and credit spread changes. 100 bps = 1%.
APA Citation
Clark, R. (2025). Basis Points (BPS). VixShield Trading Glossary. Retrieved from https://www.vixshield.com/glossary/basis-points
RC
Russell Clark, FNP-C
Author of SPX Mastery series · Founder of VixShield
Last updated:  ·  Source: VixShield Trading Glossary — From SPX Mastery by Russell Clark
⚠️ Not financial advice. This definition is educational content from the SPX Mastery book series by Russell Clark (VixShield). Past performance is not indicative of future results. Trading options involves substantial risk of loss and is not appropriate for all investors. Always paper trade before risking real capital.