Pip Currency Trading: What is a Pip?

by Joe Oliver, Forex Trading-Pips

Pip Currency Trading: What is a Pip?

PIP stands for ‘percentage in point’ and is the smallest commonly quoted change that a currency exchange rate can make. A pip is a standardised unit, usually $0.0001 for US$ related pairs. Most currency pairs are priced with 4 decimal points with the exception of Japanese Yen which is quoted to two decimal places.

For example Euro currency is currently quoted 1.4407. If Euro moves from 1.4407 to 1.4408 then Euro has appreciated by 1 pip: 1 Euro can now buy US$1.4408.

Fractional Pips
The advent of electronic forex platforms has brought about greater price transparency and competition, a few platforms now quote fractional pips down to 1/10 of a pip at the 5th decimal point.