What is Pip?

The smallest standard unit of price movement in forex — 0.0001 on most pairs, 0.01 on JPY pairs.

A pip (percentage in point) is the standard unit for measuring price movement in the forex market. On most currency pairs, which are quoted to four decimal places, one pip is a movement of 0.0001 — so a rise in EUR/USD from 1.0850 to 1.0851 is a move of one pip. Pairs involving the Japanese yen are quoted to two decimal places, making one pip 0.01. Most modern platforms also display a fifth decimal called a pipette, worth one-tenth of a pip.

Pips matter because they standardise how traders talk about movement, risk and reward. A stop loss of 30 pips means the same distance to any forex trader in the world, regardless of account size. The cash value of a pip depends on the position size: on a standard lot of a USD-quoted pair, one pip is worth about $10, on a mini lot $1, and on a micro lot $0.10. Every risk calculation in trading — position sizing, risk:reward, expectancy — begins with counting pips.