A "pip" is the basic unit of price movement in Forex. If you trade currencies, you'll measure every move, stop and target in pips — so it's worth nailing down early.
The definition
Pip stands for "percentage in point" (or "price interest point"). For most currency pairs it's the fourth decimal place:
- EUR/USD moves from 1.0840 to 1.0841 → that's 1 pip.
The exception is yen pairs, quoted to two decimals, where a pip is the second decimal place:
- USD/JPY moves from 151.40 to 151.41 → that's 1 pip.
Pips vs pipettes
Many brokers quote one extra decimal — the pipette, or a tenth of a pip. So EUR/USD at 1.08415 shows a pipette. It's just finer resolution; the pip is still the fourth decimal.
Why pip value matters
A pip's cash value depends on your position size, not the pair. On a standard lot (100,000 units) a pip is roughly $10 on many USD-quoted pairs; on a mini lot it's about $1. The exact figure changes with the pair and your account currency — the pip-value calculator does it for you.
Pips in practice
- A stop "40 pips away" plus your pip value tells you the cash risk of the trade.
- From there, the position-size calculator converts your risk percentage into the right lot size.
Pips measure the move. Pip value turns that move into real money — which is what your risk plan actually cares about.
Education only — not financial advice.