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Pip

The smallest standard price increment in a currency pair - usually the fourth decimal place.

A pip stands for 'percentage in point' and is the unit traders use to measure movement. For most currency pairs it is 0.0001, so EUR/USD moving from 1.0850 to 1.0851 is a one-pip move. For pairs quoted against the Japanese yen, the pip sits at the second decimal place instead.

Many brokers now quote a fifth decimal, the pipette or fractional pip, which lets them advertise spreads like 0.7 rather than rounding to 1. It is the same measurement, just at higher resolution.

Pip value depends on position size. On a standard lot of 100,000 units, one pip is roughly $10 on a USD-quoted pair; on a mini lot it is $1, on a micro lot ten cents. Knowing your pip value is what turns a stop-loss distance into an actual dollar risk figure.