Pip
Definition
A pip (percentage in point) is the smallest standard price increment in forex trading, typically the fourth decimal place (0.0001) for most currency pairs. For JPY pairs, it's the second decimal place (0.01).
Understanding pip value is essential for position sizing and risk management. For a standard lot (100,000 units) of EUR/USD, one pip equals approximately $10. For a mini lot (10,000 units), it's $1, and for a micro lot (1,000 units), it's $0.10.
Pip value varies by currency pair because it depends on the quote currency. For USD-quoted pairs (EUR/USD, GBP/USD), pip values are straightforward. For pairs quoted in other currencies (USD/JPY, EUR/GBP), pip values must be converted at the current exchange rate.
When calculating position size for prop trading, you need to know your pip value to determine how many pips of stop loss corresponds to your dollar risk amount. For example, risking $500 with a 25-pip stop on EUR/USD: $500 / ($10 per pip x 25 pips) = 2 standard lots. PropJournal handles these calculations automatically across all currency pairs.
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