What Is Pip?
A pip ('point in percentage' or 'price interest point') is the standard unit of price movement in forex. For most currency pairs (EUR/USD, GBP/USD), one pip equals 0.0001. For JPY pairs (USD/JPY, EUR/JPY), one pip equals 0.01 because of how the yen is quoted.
Profit and loss in forex are calculated in pips first, then converted to currency. On a standard lot (100,000 units), one pip is typically worth $10. Mini lots (10,000 units) make a pip worth $1; micro lots (1,000 units) worth $0.10. Pip values shift slightly based on the quote currency and current price.
Sub-pip pricing (fractional pips, or 'pipettes') is common — many brokers quote five decimal places on most pairs. The fifth decimal is one-tenth of a pip and shows up in spread calculations. A spread of 0.8 pips really means 8 pipettes.
Related terms
- Forex
- Lot Size (Forex) — Standardized trade size in forex: standard (100k units), mini (10k), micro (1k), nano (100).
- Spread — Difference between the bid and ask price of an asset.
- Leverage — Borrowed capital used to increase trade size beyond what cash alone allows.