What is a Pip in Forex?

A pip is a standard unit used to measure a change in the exchange rate of a currency pair.

For most currency pairs, 1 pip is the fourth decimal place. For example, 

• If EUR/USD moves from 1.1050 to 1.1051, it has moved by 1 pip.

In contrast, for currency pairs quoted in Japanese yen, 1 pip is usually the second decimal place. For example, 

• if USD/JPY moves from 150.20 to 150.21, that is a 1-pip move.

The monetary value of one pip depends on the currency pair, trade size, and exchange rate. Several traders use a pip value calculator to easily calculate the exact monetary value of a pip.

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