A Pip, or Point in Percentage, is the unit of measurement used in currency pairs to calculate price fluctuations. The results obtained by trading currency pairs are usually expressed in pips.
The pip is determined by the unit value of the second-to-last decimal place. In other words, if the current price of an asset is 1.04086, the pip is 0.0001.
Additionally, the smallest unit of price variation in currency pairs is called a tick or pipette, which is typically represented by the unit of the last decimal place. In our example above, that would be 0.00001. Therefore, the pip is always 10 times larger then the pipette.
Most currency pairs have five decimal places, but this can vary. For example, USD/JPY has only three decimal places, making the pip 0.01 and the pipette 0.001.
To understand how pips are used on BlackArrow to compute trade results, check this article.
Found this article useful?
Please rate us below!