What is Pip (Percentage in Point)


Pip (percentage in point) is the smallest possible change of the quotation. Pip is equal to 0.0001 or 0.00001 for the most currency pairs that are quoted to the fourth or fifth decimal point (for JPY pairs - to the second or third decimal point). Moreover, for the purpose of comparative analysis it is widely accepted among the companies’ website to indicate the pip to the fourth decimal point (for JPY pairs to the second decimal point), while in trading terminals of many companies the main currency pairs are quoted to the fifth decimal point (JPY pairs – to the third decimal point). Quotations, spreads, order distances are measured in pips.

The value of a pip depends on the trading volume and is expressed in units of quote currency (the second currency of the pair).

Example A: 1 pip volume in EUR/USD is equal to 0.0001

Trading position volumeCalculation1 pip value
100,000 EUR100,000 * 0.000110 USD
10,000 EUR10,000 * 0.00011 USD
1,000 EUR1,000 * 0.00010.1 USD
100 EUR100 * 0.00010.01 USD

Example B: 1 pip volume in USD/JPY is equal to 0.01

Trading position volumeCalculation1 pip value
100,000 USD100,000 * 0.011000 JPY
10,000 USD10,000 * 0.01100 JPY
1,000 USD1,000 * 0.0110 JPY
100 USD100 * 0.011 JPY

As you can see, pip value (price) directly depends on the position (trade) volume and is expressed in the quote currency.

The term pip allows to measure the value of the smallest rate change for the set volume of the trading position.

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