A pip (percentage in point) is the standard unit of movement in forex. If prices were distances, pips would be centimetres.
The rules
- Most pairs: a pip is the 4th decimal, 0.0001. EUR/USD from 1.0850 to 1.0851 = 1 pip.
- Yen pairs: a pip is the 2nd decimal, 0.01. USD/JPY from 150.25 to 150.26 = 1 pip.
- Brokers show one extra digit, the pipette (a tenth of a pip). In 1.08503 the final 3 is 3 pipettes = 0.3 pips.
Wick says
So when someone flexes "+50 pips today", they mean price moved 0.0050 in their favour on a pair like EUR/USD. Whether that's $5 or $5,000 depends on position size.
Counting pips
Example
EUR/USD goes from 1.0920 to 1.0975. That's 0.0055 = 55 pips. GBP/JPY goes from 191.40 to 190.85. That's 0.55 = 55 pips too.
Rookie mistake
Counting pipettes as pips. A move from 1.08500 to 1.08550 is 5 pips, not 50.
Fun fact
Gold doesn't follow the same convention. Brokers disagree on what a gold "pip" is, so pros talk about gold in dollars of movement instead.
Key takeaways
- 1 pip = 0.0001 on most pairs, 0.01 on yen pairs.
- The extra fifth (or third) digit is a pipette.
- Pips measure movement; lot size turns them into money.