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## PIP - Point in Percentage

The unit for expressing the change in the currency rate is pip and it stands for Point in Percentage. For example, a  price change in the EUR/USD from 1.1500 to 1.1501 is  0.0001 in dollar terms and it is called the one pip move. In Forex trading, the major currency pairs are quoted to four decimal places except for the USD/JPY, which is quoted to two decimal places.  So a move from 104.30 to 104.31 in USD/JPY equals 0.01 in dollar terms and it is the 1 pips move.

## PIP Calculation Formula

The formula to calculate the pip value of a pair that is quoted to four decimal places, divide 0.0001 by the current market price and multiply the result with the lot size.  For instance, to get the pip value of GBP/USD trading at 1.1500, simply  divide 0.0001 by 1.500 and multiple the result with the lot size.

Likewise to determine the pip value of the USD/JPY, divide 0.01 by the current market price and then multiply the result by your lot size. For example, if you traded a standard lot which is 100,000 at 106.20, you would divide 0.01 by 106.20 and then multiply the result with your lot size.

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