Forex
Pip
The smallest standard price movement in forex trading, typically 0.0001 for most currency pairs.
Definition
A pip (percentage in point or price interest point) is the smallest standardized move that a currency quote can change by in the forex market. For most currency pairs, a pip is equivalent to 0.0001 (1/100th of 1%), or the fourth decimal place. For Japanese yen pairs, a pip is 0.01 (the second decimal place). Pips are used to calculate profit and loss, determine spread costs, and manage risk. For a standard lot (100,000 units) of EUR/USD, one pip equals approximately $10. Understanding pip values is essential for position sizing and risk management in forex trading.