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A pip (percentage in point) is the smallest standard unit of price movement in a currency pair. For most forex pairs, one pip equals a change in the fourth decimal place (0.0001). For JPY pairs, one pip equals a change in the second decimal place (0.01). Pips are used to measure price changes, calculate profit and loss, and define spreads. Outside forex the word is used loosely: on GCC Brokers’ instrument pages, one pip on an index is one index point. Check each instrument’s tick size in its specifications.
If EUR/USD moves from 1.1050 to 1.1075, that is a 25-pip increase. On a 1 standard lot position, each pip is worth approximately $10, so a 25-pip move equals approximately $250 in profit or loss.
