Understanding Pip Values in Trading
A "pip" (percentage in point) is the smallest price move that a given exchange rate can make. For most currency pairs, this is equivalent to 1/100 of 1%, or the fourth decimal place (0.0001). For Yen-based pairs, a pip is the second decimal place (0.01).
The Value Computation
The value of a pip is determined by the size of your trade (lots) and the currency denomination of your account. If you trade a pair where the quote currency matches your account currency, the pip value is fixed (e.g. $10 per standard lot on EUR/USD in a USD account). If the quote currency differs, the pip value must be converted using the current exchange rate.