Pip
The smallest price movement in a currency pair. Typically the fourth decimal place (0.0001).
A pip is the smallest standard price move in forex: 0.0001 for most pairs, 0.01 for JPY pairs. One pip on a standard lot is about $10 of P&L on a $100,000 position.
A pip (percentage in point or price interest point) is the smallest standardized price movement in forex trading. For most currency pairs, one pip equals 0.0001 (the fourth decimal place). For JPY pairs, one pip equals 0.01 (the second decimal place). Pip values scale with position size and pair: on a standard lot, one pip on EUR/USD is $10, while on GBP/JPY the value moves with the exchange rate. Every profit target and stop distance on a trading platform is quoted in pips.
How It Works
- EUR/USD moves from 1.1000 to 1.1001 = 1 pip move
- USD/JPY moves from 150.00 to 150.01 = 1 pip move
- Pip value depends on lot size and pair
- Standard lot (100,000): 1 pip ≈ $10 for major pairs
Types of Pip
Standard Pip
0.0001 for most pairs
JPY Pip
0.01 for JPY pairs
Pipette
0.00001 - fractional pip (1/10th pip)
Trading Tips
Calculate pip value before entering trades
Spreads and commissions are measured in pips
Risk management often expressed in pips
Fun fact: Pip is also the name of our AI broker selector. Chat with Pip and get matched with the right broker for your trading style
Pip Example
Say EUR/USD moves from 1.0850 to 1.0851. That one-unit move in the fourth decimal is one pip. On a standard lot it is worth about $10, which is why traders quote stops and targets in pips before converting to dollars.
How Traders Use Pip
Speak in pips when comparing trades and dollars when sizing them. Pips keep every pair comparable. Pip value turns the distance into risk. Never confuse a 50-pip stop on GBP/JPY with a 50-pip stop on EUR/USD.
Related Terms
Sources
- InvestopediaPip definition and value examples
- BabyPipsSchool of Pipsology: pips and lots
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