The smallest standard unit of price movement in a currency pair, typically the fourth decimal place.
A pip (percentage in point) is the standard unit for measuring price changes in forex. For most currency pairs, one pip equals 0.0001 (the fourth decimal place). For JPY pairs, one pip equals 0.01. A “pipette” is one-tenth of a pip (the fifth decimal place). Pip values vary depending on lot size and the currency pair being traded.
Pips standardize how traders discuss price movement regardless of which currency pair they’re trading. They are essential for calculating profit/loss, determining stop loss distances, and comparing spreads across brokers. Understanding pip value is fundamental to proper position sizing.
EUR/USD moves from 1.1050 to 1.1075. That’s a 25-pip move. If you’re trading 1 standard lot ($100,000), each pip is worth approximately $10, so a 25-pip move equals $250 profit or loss.
The highlighted digits show pips (4th decimal) and the smaller digit is a pipette (5th decimal).