Pip
A pip is the standard unit of price movement on a currency pair.
For most pairs it represents a 0.0001 change in the exchange rate, the fourth decimal place of the quote. JPY-quoted pairs use the second decimal place — a 0.01 movement — by convention. Pip value scales linearly with position size.
This page covers the mechanic; it is not trading advice.
What a pip looks like in a quote
When EUR/USD moves from 1.0850 to 1.0851, that 0.0001 increase is one pip. On USD/JPY at 149.50 moving to 149.51, the 0.01 increase is also one pip — the unit reflects the convention for that pair, not a fixed decimal place across all pairs.
Pip values are the unit by which trade outcomes are reported and compared between instruments. A move of 50 pips on EUR/USD and a move of 50 pips on USD/JPY are equivalent in pip count but produce different cash outcomes per standard lot, because pip value depends on the pair.
Pip value: a worked calculation
For a USD-denominated account trading EUR/USD at 1.0850 with a 1 standard lot position: position size = 100,000 EUR (one standard lot of base currency). Pip = 0.0001 (the fourth decimal place for non-JPY pairs).
Pip value in the quote currency (USD) = 0.0001 × 100,000 = $10. Because USD is both the quote currency and the account currency, no conversion is needed. Pip value is $10 per pip per standard lot.
The result is fixed for any pair where USD is the quote currency (EUR/USD, GBP/USD, AUD/USD, NZD/USD): exactly $10 per pip per standard lot, regardless of the exchange rate. Halve the lot to 0.50 and pip value halves to $5; quarter the lot to 0.25 and pip value falls to $2.50.
For pairs where USD is the base currency (USD/JPY, USD/CHF, USD/CAD), pip value varies with the exchange rate. USD/JPY at 149.50: pip × position size = 0.01 × 100,000 = ¥1,000 per pip in JPY. Converted to USD at the current rate: 1,000 ÷ 149.50 = $6.69 per pip per standard lot. The same pip count produces different cash outcomes than the EUR/USD example.
Related terms
Related articles
Common questions
What is a pipette?
A pipette is one tenth of a pip — the fifth decimal place on most pairs and the third decimal place on JPY pairs. Brokers display pipettes when they offer fractional pip pricing. A spread quoted as 1.5 pips is 15 pipettes. The raw price feed often includes the pipette digit; whether it appears in the chart and trade ticket depends on the platform setting.
Why do JPY pairs use 2 decimal places?
JPY pairs are quoted with lower nominal exchange rates than other majors — USD/JPY around 149.50, GBP/JPY around 185 — versus EUR/USD around 1.0850. To keep the unit of price movement consistent in proportional terms, the convention places the pip at the second decimal place for JPY pairs. A 1-pip move on USD/JPY at 149.50 is one part in 14,950 of the rate; a 1-pip move on EUR/USD at 1.0850 is one part in 10,850 of the rate. Both are similar in proportional significance.