Pip
A pip is the standard unit of price movement in a currency pair — 0.0001 for most pairs and 0.01 for pairs quoted in Japanese yen.
Currency prices move in tiny steps, so forex traders count moves in pips rather than in cents. Once you can count pips, you can read spreads, stops and profits in one common unit.
- Category
- Trading Basics
- Reading time
- 3 min
- Also called
- Percentage in point, Price interest point, Pipette (fractional pip)
- Updated
Pips in plain words
A pip measures movement in forex, the change in value between two currencies.1
For most pairs it is the fourth decimal place, or 0.0001.1
For yen pairs it is 0.01.2 Many platforms show an extra decimal for a fraction of a pip.1
How to count pips
Identify the pair
Check whether the Trading Pair is quoted in yen.1
Find the pip digit
Fourth decimal for most pairs; second for yen pairs.1
Ignore the extra digit
The fifth (or third) decimal is a fraction of a pip.1
Subtract the prices
GBP/USD from 1.4000 to 1.4001 is one pip.2
Read the spread in pips
Pips are used to measure the bid-ask spread.1
Worked examples
Example 1 — Non-yen pair
+25 pipsHypothetical EUR/USD moves from 1.1000 to 1.1025.
| Change | 0.0025 |
| Pips | 25 |
With a pip at 0.0001, a 0.0025 move equals 25 pips.1
Example 2 — Yen pair
+5 pipsHypothetical GBP/JPY moves from 150.00 to 150.05.
| Change | 0.05 |
| Pips | 5 |
For yen pairs a pip is 0.01, so 150.00 to 150.05 is five pips.2
Example 3 — Spread in pips
2-pip costA hypothetical quote: bid 1.2500, ask 1.2502.
| Spread | 0.0002 |
| In pips | 2 |
Pips are used to calculate the spread between bid and ask, so you start this trade 2 pips behind.1
Pip vs pipette
| Aspect | Pip | Pipette |
|---|---|---|
| Most pairs | 0.0001 | 0.00001 |
| Yen pairs | 0.01 | 0.001 |
| Used for | Moves, stops, spreads | Finer quotes |
| Relation | 1 pip | 1/10 pip |
How traders use pips
Setting stops
Placing a Stop Loss a set number of pips away.
Comparing costs
Reading the Bid-Ask Spread in pips.
Sizing trades
Combining pips with Lot Size and Pip Value for Position Sizing.
Tracking results
Logging trades in pips in a Trading Journal.
Advantages and disadvantages
Advantages
- A common unit across currency pairs.
- Makes spreads and stops easy to compare.
- Simple arithmetic.
Disadvantages
- Yen pairs use a different decimal.
- Pips are not money until converted.
- Fractional pips can confuse beginners.
- Some brokers call them points.
Going deeper
Read as far as you need. Each level builds on the one before it.
The smallest standard step
Beginner
A pip is the smallest standardized move a quote can make — 0.0001 for most pairs.1
Yen and fractions
Intermediate
Yen pairs use the second decimal and many platforms add a fractional digit.1
From pips to money
Advanced
Traders state profit or loss in pips, then convert using position size and pip value.3
Common mistakes
Wrong decimal on yen pairs
Counting 0.0001 steps on USD/JPY.
Counting pipettes as pips
Reading 1.10005 to 1.10015 as 10 pips instead of 1.
Forgetting the spread
Ignoring the pips lost on entry.
Pips without size
Judging risk in pips only, without Lot Size.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- Most pairs: 1 pip = 0.0001.
- Yen pairs: 1 pip = 0.01.
- A pipette is a tenth of a pip.
- Spreads are quoted in pips.
- Convert pips to money with pip value.
Frequently asked questions
What does pip stand for?
Is a pip the same as a point?
Are pips used outside forex?
Further learning
- Pip Value
Turning pips into money.
- Lot Size
How trade size affects pip value.
- Bid-Ask Spread
Costs measured in pips.
- Position Sizing
Risking the right amount per pip.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- IG. What is a Pip? | Pip Definition (opens in a new tab) Checked .
- CMC Markets. What Is Pips In Forex Trading? (opens in a new tab) Checked .
- OANDA. What is a pip in trading? (opens in a new tab) Checked .
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. We are not affiliated with any publisher linked above. Last reviewed . Report an error or request a source credit.