Pip, pips

Pip

What is a pip?

In forex trading, a pip is a measurement of how far the price has moved. Forex traders use pips as a measure for the win and loss in a trade.

1 pip has the value of 1/10,000th of the quote currency of most major currency pairs. In the case of the Japanese yen, a pip would be worth 1/100th of a Japanese yen.

Nowadays, most brokers offer an even smaller price movement – 1/100,000th of the quote currency (1/1,000th for the yen). This smaller unit is sometimes called "pipette".

To illustrate, if the price of the EUR/USD is 1.35392, the pip is the fourth decimal place, in this case, the 9. The pipette is the 5th decimal place, in this case, the 2.

If the price of the USD/JPY is 77.084, the pip is the 2nd decimal place, in this case, the 8. The pipette is the 3rd third decimal place, in this case, the 4.

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  • im not sure i understand it so good some 1 can try to explain it more simple?
  • Dear nirzaroor
    In Forex Trading you trade one currency for another.
    When trading a pair, for example the EURUSD, the value on the chart is how much the Euro is worth in US Dollars.
    Traders are often interested in how these values change.
    The values usually only change by small amounts.
    One day the EURUSD might show 1.3772
    Later it might be 1.3775
    This is a change of 0.0003
    For convenience, this is called a change of 3 pips
    smile
  • ok i think i understand the pip is the last number the 1.000-->"3"<-- the 4th number in most of the currency but in Japanese yen its the 3rd?
    Thanks alot btw
  • weepingAngel:
    One day the EURUSD might show 1.3772
    Later it might be 1.3775
    This is a change of 0.003
    For convenience, this is called a change of 3 pips
    smile

    a little typo there:
    it is 0.0003 change: 4th decimal is the pip and with JPY pairs, the 2nd.
    smile
  • @hindsighthero
    Thanks, I fixed it
  • hi guys.

    I still can't get why JPY pip would be worth 1/100th of a yen and other currencies 1/1000.
  • Hi Blacksmith,
    It is simply a consensus because JPY is traditionally weaker than other majors. On other currencies a pip is 1/10,000 not 1/1,000.
    Regards.
    Peter
  • Thanks hero. I'm new here, don't know much. But Tradimo is awesome. I learn new things in every topic and it's easy. this site should be number one in every search engine.

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