What is a Pip in Forex Trading?
In forex trading, a pip stands for “percentage in point” or “price interest point.”
It represents the smallest standard unit of price movement in a currency pair.
🔹 1. Definition
A pip shows how much a currency pair’s price has changed.
- For most currency pairs → 1 pip = 0.0001 (the 4th decimal place)
- For JPY pairs → 1 pip = 0.01 (the 2nd decimal place)
Examples:
- EUR/USD moves from 1050 → 1.1051 = 1 pip
- USD/JPY moves from 20 → 154.21 = 1 pip
💰 2. Pip Value
The monetary value of one pip depends on:
- The currency pair
- The trade size (lot size)
- The account currency
Approximate pip values:
| Lot Size | Units | Pip Value (USD pairs) |
| Standard Lot | 100,000 | $10 per pip |
| Mini Lot | 10,000 | $1 per pip |
| Micro Lot | 1,000 | $0.10 per pip |
Example:
If you buy EUR/USD at 1.1000 and close at 1.1050, you gain 50 pips.
⚙️ 3. Why Pips Matter
Pips are used to measure:
- ✅ Profit and loss
- 💵 Broker spread (transaction cost)
- 📈 Stop loss & take profit levels
They help traders quantify market movement and manage risk precisely.
📊 4. What Is a Pipette?
A pipette is 1/10 of a pip (0.00001) — used by some brokers for more precise quotes.
🧠 Summary
- 1 pip = the smallest price change in forex
- For most pairs: 0001 | For JPY pairs: 0.01
- Pip value depends on lot size and pair
- Understanding pips = better risk management & accuracy
#PetraTraders #ForexEducation #LearnForex #PipValue #ForexMalaysia #TraderCommunity