Markets & Assets
Pip
Definition
The smallest standard unit of price movement in forex — typically the fourth decimal place (0.0001) for most currency pairs.
How It Works
A pip (Percentage in Point) is the standard measure of price movement in forex. For EUR/USD, 1 pip = 0.0001 (so a move from 1.1000 to 1.1001 is 1 pip). For JPY pairs, 1 pip = 0.01 (due to 2-decimal pricing).
The value of a pip depends on lot size: on a standard lot of EUR/USD, 1 pip = $10. On a mini lot, 1 pip = $1. Pips help traders calculate risk per trade — if your stop-loss is 50 pips and you trade 2 standard lots, your risk is 50 x $10 x 2 = $1,000.
Understanding pip value is essential for proper position sizing in prop trading.
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