Module 5 — Pips

A pip is the standard unit of price movement. For most pairs it is the fourth decimal place: a move from 1.0850 to 1.0851 is one pip. For yen pairs, quoted to two decimals, a pip is the second decimal: 151.20 to 151.21.

Many brokers quote one extra digit — the pipette, or tenth of a pip. A quote of 1.08503 simply shows three-tenths of a pip beyond 1.0850. It does not change the definition of a pip.

What a pip is worth

Pip value depends on position size, not on your opinion of the trade. On a standard lot of EURUSD, one pip is roughly $10. On a mini lot, roughly $1. On a micro lot, roughly $0.10. Knowing this turns 'I risked 30 pips' into a real money figure — which is where risk management begins.