Pip

The word "pip" stands for "percentage in point" (sometimes "price interest point"). For nearly every currency pair quoted against currencies other than the Japanese yen, one pip equals 0.0001 — that is, one ten-thousandth of the quote currency. So if EUR/USD moves from 1.0800 to 1.0801, it has moved exactly one pip. Traders and news reports use pips rather than raw decimal changes because they give a consistent, currency-neutral way to describe how much a rate has shifted.

The important exception is any pair where the Japanese yen is the quote currency, such as USD/JPY or EUR/JPY. Because yen already trade at much larger nominal numbers (suppose USD/JPY is near 150 rather than 1.08), the market convention shifts the pip to the second decimal place — 0.01 rather than 0.0001. A move from 150.00 to 150.01 is one pip in a yen pair.

Some platforms also quote a fifth decimal place (or third for yen pairs), called a "pipette" or fractional pip, for greater precision. This can look confusing at first — a quote of 1.08003 simply means the rate sits three-tenths of a pip above 1.0800. Understanding pips is foundational to reading the FX quote conventions that appear throughout the currencies data page.