What Is a Pip? | What Are Forex Signals?

A pip is the standard unit used to measure a change in an exchange rate. For most currency pairs it is the fourth decimal place, 0.0001; for pairs involving the Japanese yen it is the second decimal place, 0.01.

How to read it

If EUR/USD moves from 1.0850 to 1.0880, it has risen 30 pips. If USD/JPY moves from 150.00 to 150.45, it has risen 45 pips.

Many brokers quote one more digit than the pip, such as 1.08503. That extra digit is a fractional pip or pipette, worth a tenth of a pip. A spread shown as 0.8 means eight-tenths of a pip.

Pair type	One pip	Example move of 25 pips
Most pairs (EUR/USD, GBP/USD, USD/CAD)	0.0001	1.0850 to 1.0875
Yen pairs (USD/JPY, EUR/JPY)	0.01	150.00 to 150.25

What a pip is worth

A pip is a price unit, not a dollar amount. Its value depends on the position size and on which currency is quoted second. For one standard lot (100,000 units of the first currency):

Pair	Approximate value of 1 pip
EUR/USD or GBP/USD (USD quoted second)	$10.00
USD/JPY at 150.00	about $6.67
USD/CAD at 1.3800	about $7.25

When the US dollar is the second currency, one pip on a standard lot is always $10. Otherwise the value is converted at the current rate, so it changes slightly as the price moves. Position sizes are explained in what is lot size.

Why signals quote pips

Signal providers report results in pips because pips are the same for everyone, while dollars depend on how much each follower trades. That is convenient, and it is also a way to make results look better than they are:

Pips hide position size. “+300 pips this month” says nothing about whether the provider risked 1% or 20% of an account to get them.
Pips across pairs are not equal. A pip on USD/JPY is worth less than a pip on EUR/USD for the same lot size.
Pips are often counted before costs. A spread of 1 to 2 pips per trade can consume a large share of a high-frequency service’s claimed pips.

Converting a signal from pips into dollars at risk is the first step in deciding whether to take it, covered in pips, lots and signal math.

A tiny example

A signal says: buy EUR/USD at 1.0850, stop loss 1.0820. The stop is 30 pips away. At one standard lot that is $300 of risk; at 0.1 lot it is $30. The pips are identical, but one trade risks ten times as much money.