What a pip is
A pip is the smallest traditional move in a pair: the fourth decimal place on most pairs, and the second decimal on pairs quoted in Japanese yen.
EURUSD1.0850 → 1.0851 is one pip.USDJPY150.20 → 150.21 is one pip.
Modern platforms quote one extra digit. That fifth (or third) decimal is a point, also called a pipette — a tenth of a pip. MT5 shows EURUSD as 1.08503, and the last digit is the point.
Turning pips into money
The value of a pip depends on the size of your position. For a standard lot (100,000 units) on a pair where the US dollar is the quote currency, one pip is worth 10 USD.
| Position | Pip value on EURUSD |
|---|---|
| 1.00 lot | 10 USD |
| 0.10 lot | 1 USD |
| 0.01 lot | 0.10 USD |
pip value = lot size × contract size × 0.0001
For pairs where the dollar is not the quote currency, the platform converts the value into your account currency for you.
Summary
A pip is the fourth decimal (second on yen pairs), a point is a tenth of that, and a pip's money value scales with your lot size. Next: what a lot is.