Free Trading School · Level 3: Forex Essentials
Pips and pipettes
A pip is the standard unit for measuring how much a currency pair moves. For most pairs it is the fourth decimal place: 0.0001. For pairs that include the Japanese yen it is the second decimal place: 0.01.
EUR/USD moving from 1.0850 to 1.0851 is a one-pip move.
- EUR/USD from 1.0850 to 1.0875 = 25 pips.
- USD/JPY from 150.20 to 150.65 = 45 pips.
- Many brokers show a fifth decimal (or third for yen pairs). That extra digit is a pipette, one tenth of a pip.
Traders talk in pips rather than dollars because a pip is the same size no matter how big the position is. "My stop is 20 pips away" means the same thing for everyone. What it is worth in money depends on your lot size.
One pip = 0.0001 for most pairs and 0.01 for yen pairs. Measure your stops and targets in pips first, then convert to money.
Quick answers
A pip is the standard unit for measuring how much a currency pair moves. For most pairs it is the fourth decimal place: 0.0001. For pairs that include the Japanese yen it is the second decimal place: 0.01.
One pip = 0.0001 for most pairs and 0.01 for yen pairs. Measure your stops and targets in pips first, then convert to money.
30 pips. For yen pairs a pip is 0.01, so 0.30 ÷ 0.01 = 30 pips.
Next lesson: Lots and what a pip is worth