Pips in Forex Market


What is Pip for Forex Market?

Pip is an acronym for "percentage in point" or "price interest point." A pip is the smallest price move that an exchange rate can make based on forex market convention. In practical terms, a pip is one-hundredth of one percent, or the fourth decimal place (0.0001). Movements in the exchange rate are

measured by pips. Since most currency pairs are quoted to a maximum of four decimal places, the smallest change for these pairs is 1 pip.


Example

For currency pairs such as the EUR/JPY and USD/JPY, the value of a pip is 1/100 divided by the exchange rate. For example, if the EUR/JPY is quoted as 132.62, one pip is 1/100 ÷ 132.62 = 0.0000754.

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