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# Forex: Price Interest Points (PIPs)

In forex trading, PIPs or Price Interest Points are commonly used by forex traders to indicate profits or losses. It's not unusual for a forex trader to say "I gained 50 pips on the deal."

### PIPs in Detail

A PIP is used for measuring the change of rate in a currency pair. For currency pairs that display rates as four decimal places, one pip equals 0.0001. This includes most leading currencies like USD, EUR, AUD, CAD, and GBP.

Example 1: Let's say the price of EUR/USD is 1.2399. If the price of this pair increases to 1.2400 or decreases to 1.2388, it would mean a change of 1 PIP.

The exception to this rule is currency pairs that include yen as these are displayed in two decimal places.

Example 2: USD/JPY is displayed as 115.22 with only two decimal points, so a one pip change in USD/JPY will be 115.21 or 115.23. Similarly, EUR/JPY is displayed as 142.84, and a one pip change for EUR/JPY will be 142.83 or 142.85.

The small size of PIPs ensures investors don't lose huge amounts of money.

### PIPs in action

The impact of changes in PIPs depends on the amount of units purchased or sold. If the price of EUR/USD is 1.2399 and if you bought 10,000 units of this currency pair, it will cost USD 12,399. Let's say the price of this pair increased by a PIP to 1.2340, the total price will increase to USD 12,340, and you will gain USD 1 from this trade (12,340-12,399).

On any given day, the price fluctuation for most currencies is between 100 to 150 pips.

If you are into forex trading, check our Forex calculator for calculating the margin used.

### Forex: Supporting guides and articles

Use our Multi-Currency Forex Margin Calculator which is updated daily to calculate the best forex rate and manipulate forex margin ratio metrics for bespoke Forex Investment results. A popular and powerful free Forex tool.

• Forex Exchange Rate: Exchange rate is the price of one currency in another currency. Exchange rate is also known as the rate of exchange
• Forex Currency Pair: When you deal in the forex market, you deal in currency pairs. You cannot buy an individual currency. Instead you buy units of currency pairs.
• Forex Leverage: Forex leverage refers to investing in the forex market on a credit basis or by using debt.
• Forex Market: Forex or the foreign exchange market is used by people for buying and selling of currencies. The forex market is also known as the currency market.
• Forex Trading: Forex trading refers to the buying and selling of currencies to take advantage of the price movements and volatility of the forex market.
• Forex Margin Call: Margin call is a call from your forex broker when your account balance goes below the maintenance margin.
• Forex Margin Ratio: Forex Trading: Margin ratio is used for expressing the forex leverage in a ratio format.
• Forex Margin Used: Margin used indicates the amount you have actually used in a Forex trade, excluding any leverage.
• Forex Maintenance Margin: Maintenance margin refers to the minimum amount you need to maintain in your forex trading account.
• Forex: Price Interest Points (PIPs): PIPs or Price Interest Points are commonly used by forex traders to indicate profits or losses.