Pip

Pip, or price interest point, is a unit of measure used in the foreign exchange (Forex) market. It is the smallest increment of price movement for any currency pair, and is usually the fourth decimal place in a currency pair. For example, if the EUR/USD currency pair moves from 1.1234 to 1.1235, that is one pip of movement. Pips are also used in other markets, such as commodities, and are sometimes referred to as points.

History of the Term

The term “pip” was first used in the foreign exchange market in the late 1980s. It was derived from the phrase “price interest point”, which was used to describe the smallest increment of price movement in the market. The term “pip” is now widely used in the Forex market, and is also used in other markets such as commodities.

Comparisons

Summary

Pip, or price interest point, is a unit of measure used in the foreign exchange (Forex) market. It is the smallest increment of price movement for any currency pair, and is usually the fourth decimal place in a currency pair. Pips are also used in other markets, such as commodities, and are sometimes referred to as points. To learn more about pips, traders can visit websites such as Investopedia, Forex.com, and DailyFX.

See Also

• Currency Pair
• Forex Market
• Price Movement
• Commodities
• Points
• Spread
• Leverage
• Margin
• Lot Size
• Stop Loss

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