What are pips in forex?
A pip is the smallest standard price increment in a forex pair. For most pairs like EUR/USD or GBP/USD, one pip equals 0.0001 (the fourth decimal place). For JPY pairs like USD/JPY, one pip equals 0.01 (the second decimal place).
Pip examples
- EUR/USD moves from 1.0850 to 1.0865 → 15 pips
- USD/JPY moves from 148.50 to 149.00 → 50 pips
- XAU/USD (gold) moves from 2350.00 to 2351.00 → 100 pips (gold uses different pip values)
Pip value in dollars
For a 1 standard lot (100,000 units) of EUR/USD, 1 pip = $10. For a 0.1 lot (mini lot), 1 pip = $1. Pip value varies by pair and lot size, your broker platform shows the exact value per pip before you open a trade.
Why pips matter for TP and SL
When a signal shows TP at 1.0920 and entry at 1.0870, that is 50 pips of upside. SL at 1.0840 means 30 pips of risk. Pip distances help you calculate the dollar risk before entering the trade.
What is a pipette?
A pipette (fractional pip) is one-tenth of a pip. Most modern brokers quote prices to 5 decimal places for major pairs. The fifth decimal is the pipette. Signals are typically measured in pips, not pipettes.
How do I calculate my risk in dollars per trade?
Risk = (SL distance in pips) × (pip value for your lot size). If SL is 30 pips away and you trade 0.1 lot of EUR/USD ($1/pip), your risk is $30 per trade.