, a percentage in point
) is the smallest measure of Price move used in forex
trading. For instance, if the currency
pair EUR/USD is currently trading at 1.3000 and then the exchange rate
changes to 1.3010, the pair did a 10 pips (smallest units) move. The pip is the smallest measure regardless of the fractional representation of the currency exchange rate. Thus, 1.3000 to 1.3010 is the same move in pips terms as 110.00 to 110.10.
In order to calculate the pip value or how much is one pip, some additional information is needed, such as: trading size, leverage used, and the actual rate of the pair for which you want to calculate the pip value. For example in case of US Dollar, with leverage of 1:100 and trading volume of 1 lot, the minimum fluctuation point will be 10 USD.
- Archer, Michael & Bickford, Jim, "Getting Started in Currency Trading, Winning in Todays Hottest Marketplace", John Wiley & Sons, Inc., Hoboken, New Jersey, 2005