A-BEGINNERS-GUIDE-TO-FOREIGN-EXCHANGE-TRADING

Pip/Point
A pip – a common term in the business – serves as an
abbreviation for ‘point in percentage’ or ‘price interest
point’. It is the unit of measurement to express the
change in value between two currencies.
Using the EUR/USD exchange rate depicted above:
1.07950 – we can see in order to buy 1 Euro (remember
the base currency always represents 1 unit) it’ll cost
$1.07950. Assuming the market skips to $1.07960, price
has advanced one pip higher – that is a move from
.0795 to .0796, a .0001 price move.
The majority of forex pairs go out to 4 decimal places,
though there are some exceptions such as the
Japanese yen pairs that go out to two decimal places.
The last value on the quotation: $1.07950 is called a
‘pipette’, which equals 1/10 of a pip. If the EUR/USD
moves to $1.07952, a 2-pipette advance has been
observed.