What is a Pip and How to Read It?

A "Pip" stands for Percentage In Point. It is the unit of measurement to express the change in value between two currencies. For most currency pairs, a pip is the fourth decimal place.

Reading Pips

If the EUR/USD moves from 1.1050 to 1.1051, that 0.0001 rise in value is ONE pip. If it moves from 1.1050 to 1.1060, that is a 10-pip move.

There is an exception for currency pairs containing the Japanese Yen (JPY). For JPY pairs, a pip is the second decimal place. So, if USD/JPY moves from 130.50 to 130.51, that is a one-pip move.

Fractional Pips (Pipettes)

Modern brokers quote prices to 5 decimal places (and 3 for JPY pairs). This extra number is a fractional pip, also known as a pipette. It represents one-tenth of a pip. For example, in 1.10505, the last 5 is the pipette.

Why Pips Matter

Your profit or loss is determined by how many pips the market moves in your favor or against you. However, the actual monetary value of a pip depends on your trade size (lot size) and the currency pair you are trading.

For example, if you trade 1 standard lot (100,000 units) of EUR/USD, a 1-pip movement is worth exactly $10. If you trade a micro lot (1,000 units), a 1-pip movement is worth $0.10.

You can easily determine the exact value of a pip for any trade size using our Pip Value Calculator.

Disclaimer: This article is for educational purposes only and does not constitute financial advice. Trading involves significant risk of loss.