Ever heard of “pips” and wondered what they mean ?

A pip, or “percentage in point,” represents the smallest price variation. It is the primary unit of measurement for changes in currency pair pricing.

Most currency pairings are stated to four decimal places, with the exception of Japanese yen pairs, which are quoted to two decimals. So if the EUR/USD goes from 1.2000 to 1.2001, that is a one-pip change.

Pips are necessary for determining profit and loss. Understanding pip values enables traders to calculate possible gains or losses and manage risk appropriately.

Mastering pip movement may help you improve your trading approach by directing your entry and exit decisions for the best results. It’s all about paying attention to those small price fluctuations.