// TRADING TERMINOLOGY
What is Pip?
A "pip" (percentage in point) is the smallest price move that a given exchange rate makes based on market convention.
In-Depth Explanation
For most currency pairs, such as the EUR/USD, it is the fourth decimal place. For example, a move from 1.0800 to 1.0801 is one pip. For JPY pairs, a pip is the second decimal place (e.g., 145.01 to 145.02). Understanding pips is fundamental to calculating your profit, loss, and risk per trade.
Practical Example
"If you buy GBP/USD at 1.2500 and the price rises to 1.2550, the price has moved up by 50 pips."
Master the language of risk
Knowing the terms is just the start. Learning how to apply them is where the edge is found.
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