In forex trading, a pip - short for percentage in point - is the standard unit used to measure price movement between currency pairs.

In forex trading, a pip - short for percentage in point - is the standard unit used to measure price movement between currency pairs. For most pairs quoted to four or five decimals, one pip equals 0.0001; for JPY pairs quoted to two or three decimals, one pip equals 0.01. For example, if EUR/USD rises from 1.1050 to 1.1051, that is a move of 1 pip. Many brokers also display fractional pips (called pipettes) worth 0.1 of a pip. Knowing what a pip is helps you compare spreads, set stop-loss and take-profit levels, and size positions with precision. Pip value depends on the currency pair, your account currency, and position size: on USD-quoted pairs, a standard lot (100,000 units) typically makes each pip worth about $10, a mini lot about $1, and a micro lot about $0.10. You can convert pip value for non-USD accounts with a quick calculation. Mastering pips improves risk management and consistency. Once you translate your strategy into pips - risk per trade, average reward, and daily range - you can measure performance clearly, regardless of price or leverage.

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