# What is Pip (Percentage in Point)

Pip (percentage in point) is the smallest possible change of the quotation. Pip is equal to 0.0001 or 0.00001 for the most currency pairs that are quoted to the fourth or fifth decimal point (for JPY pairs - to the second or third decimal point). Moreover, for the purpose of comparative analysis it is widely accepted among the companies’ website to indicate the pip to the fourth decimal point (for JPY pairs to the second decimal point), while in trading terminals of many companies the main currency pairs are quoted to the fifth decimal point (JPY pairs – to the third decimal point). Quotations, spreads, order distances are measured in pips.

The value of a pip depends on the trading volume and is expressed in units of quote currency (the second currency of the pair).

Example A: 1 pip volume in EUR/USD is equal to 0.0001

 Trading position volume Calculation 1 pip value 100,000 EUR 100,000 * 0.0001 10 USD 10,000 EUR 10,000 * 0.0001 1 USD 1,000 EUR 1,000 * 0.0001 0.1 USD 100 EUR 100 * 0.0001 0.01 USD

Example B: 1 pip volume in USD/JPY is equal to 0.01

 Trading position volume Calculation 1 pip value 100,000 USD 100,000 * 0.01 1000 JPY 10,000 USD 10,000 * 0.01 100 JPY 1,000 USD 1,000 * 0.01 10 JPY 100 USD 100 * 0.01 1 JPY

As you can see, pip value (price) directly depends on the position (trade) volume and is expressed in the quote currency.

The term pip allows to measure the value of the smallest rate change for the set volume of the trading position.

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