A pip is a standard unit used to measure price movement in forex.
Most currency pairs move in very small decimal increments. Instead of saying a price moved by one ten-thousandth, traders say it moved by one pip.
Where is the pip?
For most currency pairs, a pip is the fourth decimal place.
Example:
1.0851
If EUR/USD moves from 1.0851 to 1.0852, it has moved 1 pip.
If it moves from 1.0851 to 1.0857, it has moved 6 pips.
The JPY exception
Japanese yen pairs are quoted differently. For JPY pairs, a pip is usually the second decimal place.
Example:
150.23
If USD/JPY moves from 150.23 to 150.24, it has moved 1 pip.
Pips and pipettes
Many modern platforms show one extra decimal place beyond a pip. That smaller unit is often called a pipette.
For example, EUR/USD may display as 1.08514. The fourth decimal place is the pip and the fifth decimal place is the pipette.
Why pips matter
Pips let traders describe market movement independently of account size.
The money value of a pip depends on:
- Currency pair
- Trade size
- Account currency
- Current exchange rate
For EUR/USD, common approximate values are:
| Lot size | Platform volume | Approximate pip value |
|---|---|---|
| Micro lot | 0.01 | $0.10 per pip |
| Mini lot | 0.10 | $1 per pip |
| Standard lot | 1.00 | $10 per pip |
This is why position size matters. A 50-pip move can be a small result on a micro lot or a large result on a standard lot.
Read more about lot sizes.