CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72.78% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money before trading CFDs.

### What is a PIP?

Currency prices typically move in such tiny increments that they are quoted in pips or percentage in point. In most cases, a pip refers to the fourth decimal point of a price that is equal to 1/100th of 1%.

Fractional Pips

The superscript number at the end of each price is the Fractional Pip, which is 1/10th of a pip. The fractional pip provides even more precise indication of price movements.

Pips in practice

Calculating the value of a pip

The value of a pip varies based on the currency pairs that you are trading and depends on which currency is the base currency and which is the counter currency.

Example of EUR/USD:

• You buy 10,000 euros against the U.S. dollar (EUR/USD) at 1.10550 and you earn \$1 for every pip increase in your favor. If you sold at 1.10650 (a 10-pip increase), you would make \$10.
• If the above circumstances were the same except that you sold at 1.10450 (a ten-pip decrease), you would lose \$10.

Example of USD/JPY:

• You buy 10,000 U.S. dollars against the Japanese yen at 106.20 and you earn \$0.94 for every pip increase in your favor. If you sold at 106.40 (a 20-pip increase), you would make \$18.80.
• If the above circumstances were the same except that you sold at 106.00 (a 20-pip decrease), you would lose \$18.80.

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