Glossary
Pip
The smallest standard price move in a currency pair — the unit traders use to measure gains, losses and spreads.
Pip, explained
A pip ("percentage in point") is the smallest standardised amount a currency pair normally moves. For most pairs one pip is 0.0001, the fourth decimal place, so EUR/USD ticking from 1.0840 to 1.0841 is a one-pip move.
Pairs that quote the Japanese yen are the exception: because the yen trades at much larger nominal values, a pip there is 0.01 — the second decimal place. So USD/JPY moving from 156.20 to 156.21 is one pip, not 0.0001.
Most modern platforms also quote a fifth decimal place (a fractional pip, called a pipette, one tenth of a pip). When a broker advertises a 0.8 pip spread, they mean 8 pipettes. Confusing pips and pipettes is a common beginner error that makes spreads and stops look ten times bigger or smaller than they are.
Pips are the common language of forex risk. Spreads, stop distances and targets are all quoted in pips, which is why getting this single unit right makes the rest of the maths fall into place — pip value, position size and risk-reward all build directly on it.
On the desk we describe every setup in pips precisely because it is account- and broker-agnostic: a 25-pip stop is the same idea whether you trade micro lots or standard lots. We keep a dedicated deep-dive on this — see the fuller pip guide for the conversions worked through step by step. (Deep-dive: /learn/what-is-a-pip)
Frequently asked questions
- How much is one pip worth?
- It depends on lot size. On a standard lot of EUR/USD a pip is about $10, on a mini lot about $1, and on a micro lot about $0.10. The exact figure also shifts slightly for pairs where USD is not the quote currency.
- What is a pipette?
- A pipette is one tenth of a pip — the fifth decimal place on most pairs (the third on yen pairs). Brokers show it for tighter pricing, so a spread of 0.8 pips is displayed as 8 pipettes.
- Why is a pip different on yen pairs?
- Because the yen trades at large nominal values, a one-pip move on pairs like USD/JPY is 0.01 (the second decimal) rather than 0.0001, so the pip sits in a different place on the quote.
Related terms
Pip Value
What a single pip is worth in money — it depends on the pair and your position size.
ReadSpread
The gap between the bid and ask price — the built-in cost of opening a trade.
ReadLot
The standardised unit of trade size in forex — a standard lot is 100,000 units of the base currency.
ReadStop Loss
A pre-set order that closes a losing trade at a defined price, capping the loss.
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Vocabulary is the easy part. See how the desk turns these concepts into structured trades with defined risk on every position.