What is a pip in forex? Pips, pipettes and points explained

"Pip" is usually explained as percentage in point or price interest point. Whatever its origin, it is simply the standard unit for measuring price changes in currency pairs.

#Pip size by pair

If EUR/USD moves from 1.1350 to 1.1375, it has moved 25 pips. If EUR/JPY moves from 178.41 to 177.91, it has moved 50 pips.

#Pipettes: the fifth decimal

Most European brokers quote EUR/USD to five decimals, such as 1.13507. The fifth decimal is a pipette or fractional pip, one tenth of a pip. A spread of 0.3 pips means the difference between bid and ask is three pipettes. Be careful when a platform shows "points": on MetaTrader, a "point" is the smallest price increment, i.e. a pipette, so a stop 250 points away is only 25 pips.

#What a pip is worth

A pip's value depends on the pair, your position size and your account currency:

pip value = pip size × units traded, in the quote currency, then converted to your account currency.

• 1 standard lot (100,000) of EUR/USD: 0.0001 × 100,000 = $10 per pip.
• 1 mini lot (10,000): $1 per pip; 1 micro lot (1,000): $0.10.
• If your account is in euro and EUR/USD is 1.1350, $10 ≈ €8.81.

Pip value calculator
What one pip is worth in euro, pounds, francs or any account currency.

#Pips vs points for indices, gold and shares

For CFDs on indices, commodities and shares, brokers usually talk in points – one unit of the price. A 40-point move in the Germany 40 index from 24,000 to 24,040 on a €1-per-point contract gains €40. Gold is often quoted to two decimals, and brokers differ on whether they call $0.01 or $0.10 a pip. Always read the contract specification for each instrument.

#Why pips matter

Thinking in pips lets you compare trades regardless of position size: your spread, your stop-loss and your target are all measured in pips. Combined with the pip value, they tell you exactly how much you risk – the basis of every sensible position-sizing plan.