What is Pip? - Definition & Explanation

Definition

The smallest standard price movement in a currency pair, typically 0.0001.

Pip Explained

A pip (percentage in point) is the smallest standard price movement, equal to 0.0001 for most pairs or 0.01 for JPY pairs. For a standard lot, one pip typically equals $10. Pips are used to measure profit, loss, and spread.

Related Terms

Spread

The difference between the bid and ask price, representing the broker's primary cost to the trader.

Bid-Ask Spread

The difference between the bid and ask price of a currency pair.

Pip - Frequently Asked Questions

For a standard lot (100,000 units) of EUR/USD, 1 pip = $10. Mini lot = $1. Micro lot = $0.10.

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