Pip

A pip, short for “percentage in point” or “price interest point,” is the standard unit of measurement used to express the change in value between two currencies in a forex pair. For most currency pairs, one pip equals 0.0001, or one-hundredth of a percent. For example, if the EUR/USD moves from 1.1050 to 1.1051, that’s a one pip increase.

Pips are crucial in calculating profits, losses, and risk in Forex trading. The value of a pip depends on the size of the trade (lot size), the currency pair, and the account currency. Some brokers also quote prices with an extra decimal place (a fractional pip or pipette) to provide more precise pricing.

Browse through other terms in our Trader’s Dictionary.