Pip

A "Pip" is a basic concept in Forex (foreign exchange) trading and stands for "Percentage in Point" or "Price Interest Point." It represents the smallest price move that a currency pair can make in the forex market. For most currency pairs, a pip is equivalent to a one-digit movement in the fourth decimal place of a currency pair. For example, if the EUR/USD pair moves from 1.1050 to 1.1051, that 0.0001 USD rise in value is one pip. However, for currency pairs involving the Japanese Yen (like USD/JPY), a pip is the movement in the second decimal place because the Yen is much closer in value to one hundredth of other major currencies. In this case, a movement from 123.45 to 123.46 is one pip. Pips are used by traders to measure the change in value of a currency pair and to express the profit or loss from their trades. The concept of pips is central in Forex trading as it helps traders to understand and calculate the changes in the value of currencies.