What is the definition of Pips in Forex ?

In forex trading you will often hear about  PIPS or just PIP.

Don’t start to trade forex, unless you fully understand the meaning of this important term!

The definition of Pips in forex

Pips in forex are the points or units that represent the smallest increment in the price of currency exchange rate.

An example of a Pip

Let’s take major currency pair EURUSD  … a change from the EURUSD from 1.3201 to 1.3203 is then an increase of 2 pips (points).


PIP is a very important term in forex trading!

PIP is used to calculate profit/loss by measuring price points. Performance (profitability) of all forex trading strategies and EA’s (expert Advisor)  is based on PIPs. Also when forex traders talk about their trading strategies, they always talk how many pips of profit/loss they made on each trade.

The value of a PIP in forex

The value of a PIP depends on the position size. This is usually measured in LOTs and their size.Please read this article where you learn more about LOT in forex trading.


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