Pip

A pip (Percentage in Point) is the standard unit of price movement in forex. For most currency pairs, one pip equals 0.0001 (the fourth decimal place).

Pip Values

Standard Calculation

• EUR/USD: 1 pip = 0.0001
• USD/JPY: 1 pip = 0.01 (only 2 decimal places for JPY pairs)
• GBP/USD: 1 pip = 0.0001

Fractional Pips (Pipettes)

Many brokers quote 5 decimal places (3 for JPY pairs). The 5th decimal is called a "pipette" or "fractional pip" = 0.1 pips.

Pip Value by Lot Size

For USD-denominated pairs (like EUR/USD):

| Lot Size | Units | Pip Value |

|----------|-------|-----------|

| Standard | 100,000 | $10 |

| Mini | 10,000 | $1 |

| Micro | 1,000 | $0.10 |

| Nano | 100 | $0.01 |

Calculating Trade Risk in Pips

If your stop loss is 25 pips away and you're trading 2 standard lots:

• Risk = 25 pips × $10/pip × 2 lots = $500

Why Pips Matter for Prop Traders

• Position sizing: Calculate lot size from pip distance and dollar risk
• Spread cost: A 2-pip spread on EUR/USD costs $20 per standard lot
• Performance tracking: Measuring results in pips removes lot size variation