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.