Pips

In forex trading, a pip (short for "percentage in point") is the smallest measurable change in a currency pair's exchange rate. Usually, it represents a 0.0001 shift for most pairs, except those involving Japanese yen, where a pip equals 0.01. For example, if EUR/USD moves from 1.1000 to 1.1001, that's a one pip increase. Pips help traders quantify and compare price movements, assess potential profits or losses, and manage risk. Understanding pips is fundamental to navigating and communicating within the forex market efficiently.