A pip—short for “percentage in point” or “price interest point”—is the smallest standardized price movement in forex trading.
For most currency pairs, one pip corresponds to the fourth decimal place (0.0001), while for Japanese yen pairs it corresponds to the second decimal place (0.01).
Many brokers also display fractional pips (pipettes), which represent an additional decimal place of precision.
Pips are used as a universal unit to measure price movements, spreads, and trading results. The monetary value of a pip depends on position size (lot), the currency pair, and the exchange rate.
For a standard lot in EUR/USD, one pip is typically worth about 10 US dollars. Understanding pip calculations is essential for determining position size, stop-loss distance, and trading costs.
