{"id":11966,"date":"2024-04-08T11:57:16","date_gmt":"2024-04-08T07:57:16","guid":{"rendered":"https:\/\/fxglory.com\/helpdesk\/docs\/fxglory-help-center\/learn-forex\/forex-terms\/pip\/"},"modified":"2024-07-11T16:39:18","modified_gmt":"2024-07-11T12:39:18","slug":"pip","status":"publish","type":"docs","link":"https:\/\/fxglory.com\/helpdesk\/docs\/knowledgebase\/learn-forex\/forex-terms\/pip\/","title":{"rendered":"Pip"},"content":{"rendered":"\t\t
\n\t\t\t\t\t\t
\n\t\t\t\t\t\t
\n\t\t\t\t\t
\n\t\t\t
\n\t\t\t\t\t\t
\n\t\t\t\t
\n\t\t\t\t\t\t\t\t\t

In finance, especially in Forex, a percentage in point (pip) is a unit of change in the exchange rate of a currency pair.<\/p>

In other words, a pip is the smallest unit of price for a currency. It is the last decimal point in exchange rates or currency pairs.<\/p>

The major currencies, except the Japanese yen, are priced to four decimal places. For these currencies, a pip is one unit of the fourth decimal point.<\/p>

For the Japanese yen, a pip refers to one unit in the second decimal point because the yen is much closer in value to one-hundredth of other major currencies. It would be different for the other currencies.<\/p>

If the currency pair of (EUR\/USD) is traded at an exchange rate of 1.3000 (1 EUR = 1.3 USD), and the rate changes to 1.3010, the price ratio increases by 10 pips.<\/p>

In this example, if a trader buys 5 standard lots (i.e. 5 x 100,000 = 500,000) of EUR\/USD, paying USD 650,000 and closes the position after the 10 pips appreciation, the trader will receive USD 650,500 and achieve a profit of 500 US dollars (i.e. 500,000 (5 standard lots) x 0.0010 = USD 500).<\/p>

As you may already know, the change in the value of one currency relative to another is measured in ‘pips,’ which represent a very small percentage of a unit of currency’s value.<\/p>

To take advantage of this minute change in value, you need to trade large amounts of a particular currency to see any significant profit or loss.<\/p>


Here are other examples for 1 standard lot (100,000 units) for calculating the value of a pip.<\/p>

  1. USD\/JPY at an exchange rate of 112.40 (.01 \/ 112.40) x 100,000 = $8.89 per pip<\/li>
  2. USD\/CHF at an exchange rate of 1.2666 (.0001 \/ 1.2666) x 100,000 = $7.89 per pip<\/li><\/ol>

    In cases where the U.S. dollar is not the base currency, the formula is slightly different.<\/p>

    1. EUR\/USD at an exchange rate of 1.1290 (.0001 \/ 1.1290) X 100,000 = 8.85 x 1.1290 = $9.99165 per pip<\/li>
    2. GBP\/USD at an exchange rate of 1.7590 (.0001 \/ 1.7590) x 100,000 = 5.68 x 1.7590 = $9.99112 per pip<\/li><\/ol>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"

      In finance, especially in Forex, a percentage in point (pip) is a unit of change in the exchange rate of a currency pair. In other words, a pip is the smallest unit of price for a currency. It is the last decimal point in exchange rates or currency pairs. The major currencies, except the Japanese […]<\/p>\n","protected":false},"author":1,"featured_media":0,"parent":11927,"menu_order":52,"comment_status":"open","ping_status":"closed","template":"","doc_tag":[],"class_list":["post-11966","docs","type-docs","status-publish","hentry","no-post-thumbnail"],"acf":[],"_links":{"self":[{"href":"https:\/\/fxglory.com\/helpdesk\/wp-json\/wp\/v2\/docs\/11966","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/fxglory.com\/helpdesk\/wp-json\/wp\/v2\/docs"}],"about":[{"href":"https:\/\/fxglory.com\/helpdesk\/wp-json\/wp\/v2\/types\/docs"}],"author":[{"embeddable":true,"href":"https:\/\/fxglory.com\/helpdesk\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/fxglory.com\/helpdesk\/wp-json\/wp\/v2\/comments?post=11966"}],"version-history":[{"count":1,"href":"https:\/\/fxglory.com\/helpdesk\/wp-json\/wp\/v2\/docs\/11966\/revisions"}],"predecessor-version":[{"id":15205,"href":"https:\/\/fxglory.com\/helpdesk\/wp-json\/wp\/v2\/docs\/11966\/revisions\/15205"}],"up":[{"embeddable":true,"href":"https:\/\/fxglory.com\/helpdesk\/wp-json\/wp\/v2\/docs\/11927"}],"wp:attachment":[{"href":"https:\/\/fxglory.com\/helpdesk\/wp-json\/wp\/v2\/media?parent=11966"}],"wp:term":[{"taxonomy":"doc_tag","embeddable":true,"href":"https:\/\/fxglory.com\/helpdesk\/wp-json\/wp\/v2\/doc_tag?post=11966"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}