A pip is a unit of measurement in trading to express the change in value between two currencies.

If the EUR/USD moves from 1.1050 to 1.1051, that .0001 USD rise in value is ONE PIP.

A PIP is what defines your profit or loss, the value of the pip is determined by the 'volume' or contract size you opened.

Example on EUR/USD:

Lot Size

Volume

PIP Value

0.01

1,000

$0.10

0.10

10,000

$1.00

1.00

100,000

$10.00

A pip is usually the last decimal place of a price quote.

Most FX pairs go out to 4 decimal places, but there are some exceptions such as the Japanese Yen pairs (these go out to two decimal places).

For example, for EUR/USD, it is 0.0001, and for USD/JPY, it is 0.01.

Important to note - the higher your lot size the more your profit, but your losses are also greater!

Pip

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