Pips & pipettes

What is a pip?

Currency prices move in tiny steps, so traders count them in pips instead of dollars. For most pairs a pip is the 4th number after the decimal point (0.0001). EUR/USD going from 1.0850 to 1.0870 moved 20 pips: just count how much the 4th decimal changed.

Remember: Pip = the 4th decimal.

Yen pairs use the 2nd decimal

Pairs with the Japanese yen, like USD/JPY, are priced around 150.00, so a pip is the 2nd decimal (0.01) instead. USD/JPY moving from 150.20 to 150.50 is 30 pips.

Pipettes and stops

Many platforms show one extra, smaller digit at the end (1.08505). That tiny digit is a pipette, a tenth of a pip: ignore it when you count. A stop loss is the price where you exit a losing trade, and traders describe it in pips, like "a 20-pip stop".

Test yourself

More in Forex Essentials

• Base & quote
• Majors, crosses & exotics
• Bid, ask & spread
• Lots & pip value
• Order types
• Leverage & margin