Pip
A pip (percentage in point) is the smallest standard price move quoted in most forex pairs — typically the fourth decimal place, or 0.0001. It is the unit traders use to measure price change and calculate profit or loss.
For most major forex pairs such as EUR/USD or GBP/USD, one pip equals 0.0001 (one ten-thousandth). For yen pairs like USD/JPY, a pip is 0.01 (one hundredth) because the yen is quoted to two decimal places.
Pip value depends on both the lot size and the currency pair. For EUR/USD with a standard lot (100,000 units), one pip is worth approximately $10. For a mini lot it is $1, and for a micro lot it is $0.10.
Traders quote spreads and price moves in pips because it provides a currency-neutral way to compare costs. A broker with a 0.5-pip spread on EUR/USD is consistently cheaper than one quoting 1.5 pips, regardless of what account currency you trade in.
Some brokers quote prices to five decimal places (or three for yen pairs); the fifth decimal is called a pipette or fractional pip. This finer granularity improves pricing precision but the pip remains the conventional unit for reporting gains and losses.