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What is a Pip in Forex? Complete Beginner’s Guide (2025)
Master the most basic building block of Forex trading in minutes.
📌 What is a Pip?
A Pip (short for “percentage in point”) is the smallest price movement in the Forex market. For most currency pairs, one pip equals 0.0001. For JPY pairs, it’s 0.01.
📊 How to Calculate Pips?
- Example (EUR/USD): From 1.1000 to 1.1005 = 5 pips
- Example (USD/JPY): From 110.00 to 110.05 = 5 pips
💸 What is Pip Value?
The pip value depends on your lot size:
| Lot Size | Pip Value (USD) |
|---|---|
| 1 Standard Lot (100,000) | $10 per pip |
| 1 Mini Lot (10,000) | $1 per pip |
| 1 Micro Lot (1,000) | $0.10 per pip |
🧠Why is Pip Important?
- Helps calculate your profit and loss
- Determines your risk-reward ratio
- Crucial for setting stop loss and take profit
✅ Final Thoughts
Understanding pips is essential for every trader. The better you grasp pip calculations, the better your trading precision and money management will be.
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