What is a Pip?
Pip (Percentage in Point):
A pip is a unit used to measure the price movement of a currency pair. For most currency pairs, 1 pip usually equals a change in the fourth decimal place.
Example of counting pips
When EUR/USD moves from 1.0700 to 1.0705,
it is considered a price change of 5 pips.
When the price of GBP/USD moves from 1.2500 to 1.2510,
it is considered a price change of 10 pips.
What is a Point?
A Point is a trading unit similar to a Pip. In the past, currency pairs in the market had 4 decimal places, but nowadays, many brokers use 5 decimal places. Therefore, the unit is called a Point for more precision. One Pip is equal to 10 Points (1 Pip = 10 Points).
Example of counting Points
When the price of GBP/USD moves from 1.25000 to 1.25050,
it is considered a price change of 50 Points.
When the price of GBP/USD moves from 1.25100 to 1.25000,
it is considered a price change of 100 Points.
Summary of Pip and Point
In conclusion, both Pip and Point are units used to measure price movement in currency pairs in the market. However, a Point is a smaller unit, providing more precise detail in tracking price changes.
*For JPY currency pairs, there are only 3 decimal places.
For example, if the USD/JPY price moves from 150.000 to 150.001, it is considered a price change of 1 Point.
