What is Pip in FOREX Trading?

A pip is the smallest unit of movement that can change the value of a currency or exchange rate. A pip is the last decimal of a quotation. It is important to note that some pairs like USD / JPY or EUR / JPY is traded only 2 decimal places, while pairs like EUR / USD or USD / CHF is trading at four points decimales. Is therefore a point trading in any currency. For a couple that handles four decimal points, one pip is equal to 0.0001. For a couple that handles 2 decimal points, one pip is equal to 0.01. Example: When the EUR / USD moves from a value of 1.3200 to 1.3240 there are 40 pips apart and every pip equals a point of profit or loss. In most cases yourself decide the value of each pip.

Take into account that most currencies are traded in lots of $100 000. For that amount a pip is $10.

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