What Is a Pip?
Forex price moves are measured in pips. Zoom into each digit of a quote and see just how small 1 pip is.
Risk warning: forex, CFDs, options, futures and crypto assets usually involve leverage or high volatility, and you can lose more than you put in. This lesson only teaches the concepts; all numbers are for illustration and are not investment advice.
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Text version · Forex Basics, lesson 3: “What Is a Pip?”
Forex price moves are measured in pips. Zoom into each digit of a quote and see just how small 1 pip is.
1 pip = the 4th decimal place
Most pairs measure moves in pips. The smaller last digit of the quote is the pipette, equal to 0.1 pip.
Yen pairs: 2nd place
Yen prices are big numbers, so they have fewer decimals. 150.00 → 150.50 is 50 pips, not 5.
Pips are a common ruler
Whether the quote is 1.08 or 150, traders describe moves in pips, which makes them easy to compare. How much 1 pip is worth depends on position size; the lot size lesson later covers that.
Key takeaways
- For most currency pairs, 1 pip = 0.0001 (the 4th decimal place).
- For yen pairs, 1 pip = 0.01 (the 2nd decimal place).
- The smaller unit in a quote's last digit is a pipette, equal to 0.1 pip.
- Traders talk about moves in pips: EUR/USD rising 0.0025 and USD/JPY rising 0.25 are both 25 pips.
Try it yourself
You can do these exercises in this lesson's interactive simulation:
- Click "+1 pip" 3 times: which digit is rolling? What's the new price?
- Click "+1 pipette": why did the pip count go up by only 0.1? Look at the magnifier under the ruler.
- Click the example button "How many pips is 1.0850 → 1.0875?": what does "Pips" show on the right?
- Switch to USD/JPY and drag the slider to +50: what does the price change to from 150.000?
Quiz and explanations
- 1. EUR/USD rises from 1.0850 to 1.0875. How many pips is that?
- Answer: 25.0.0025 ÷ 0.0001 = 25 pips.
- 2. USD/JPY rises from 150.00 to 150.50. How big is the move?
- Answer: 50 pips.For yen pairs 1 pip = 0.01, and 0.50 ÷ 0.01 = 50.
- 3. EUR/USD falls from 1.08512 to 1.08437. How many pips is the move?
- Answer: −7.5 pips.The difference is 0.00075, and 0.00075 ÷ 0.0001 = 7.5 pips. The last digit is a pipette, which is why you get half a pip.