What is a pip?
A pip is the standard unit for measuring a change in an exchange rate.
- For most pairs, one pip = 0.0001 (the fourth decimal place).
- For pairs quoted in Japanese yen, one pip = 0.01 (the second decimal place).
Most platforms show one more decimal place. That last digit is a pipette, a tenth of a pip.
Counting pips
| Pair | From | To | Pips |
|---|---|---|---|
| EUR/USD | 1.0850 | 1.0875 | +25 |
| GBP/USD | 1.2700 | 1.2655 | −45 |
| USD/JPY | 150.00 | 150.42 | +42 |
What is a pip worth?
Pip value = units traded × pip size, in the quote currency.
For EUR/USD on a US dollar account:
| Position | Units | Value of 1 pip |
|---|---|---|
| 1 standard lot | 100,000 | $10.00 |
| 1 mini lot | 10,000 | $1.00 |
| 1 micro lot | 1,000 | $0.10 |
A Tanzanian example
Suppose you deposit $100 (roughly TZS 260,000 at an illustrative rate of TZS 2,600 per dollar) and trade 0.10 lots of EUR/USD. Each pip is worth $1. A 30-pip move against you costs $30, which is 30% of your account from one ordinary price swing.
The same trade at 0.01 lots risks $3. Pips are small; position size is what turns them into large amounts.