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In finance, specifically in foreign exchange markets, a percentage in point or price interest point (pip) is a unit of change in an exchange rate of a currency pair.

The major currencies (except the Japanese yen) are traditionally priced to four decimal places, and a pip is one unit of the fourth decimal place: for dollar currencies this is to 1/100 of a cent. For the yen, a pip is one unit of the second decimal place, because the yen is much closer in value to one hundredth of other major currencies.[1]

In the forward foreign exchange market, the time value adjustment made to the spot rate is quoted in pips, or FX points or forward points.[2]

A pip is sometimes confused with the smallest unit of change in a quote, i.e. the tick size. Currency pairs are often quoted to four decimal places, but the tick size in a given market may be, for example, 5 pips or 1/2 pip.

A rate change of one pip may be related to the value change of a position in a currency market. Currency is typically traded in lot size of 100,000units of the base currency. A trading position of one lot that experiences a rate change of 1 pip therefore changes in value by 10 units of the quoted currency or other instrument.[3]

## Example

If the currency pair of the Euro and the U.S. Dollar (EUR/USD) is trading at an exchange rate of 1.3000 (1 EUR = 1.3 USD) and the rate changes to 1.3010, the price ratio increases by 10 pips.

In this example, if a trader buys 5 standard lots (i.e. 5 × 100,000 = 500,000) of EUR/USD, paying USD 650,000 and closes the position after the 10 pips' appreciation, the trader will receive USD 650,500 with a profit of USD 500 (i.e. 500,000 (5 standard lots) × 0.0010 = USD 500). Most retail trading by speculators is conducted in margin accounts, requiring only a small percentage (typically 1%) of the purchase price as equity for the transaction. The Japanese Yen is an exception to this rule because of its worth against the US dollar being 0.01 [4]

If the NZD/USD spot is trading at 0.8325 and the NZD/USD 1-year forward contract is traded at -270 pips, the outright 1-year forward is priced at 0.8055 (0.8325 - 0.0270).

## Fractional pips

Electronic trading platforms have brought greater price transparency and price competition to the foreign exchange markets.[5] Several trading platforms have extended the quote precision for most of the major currency pairs by an additional decimal point; the rates are displayed in 1/10 pip.

## Table of pip values

The table portrays pip values for selected currencies as used by Fenics MD[6] for their forward contracts or non-deliverable forwards.

Currency Pip value
EURUSD USD 0.0001
GBPUSD USD 0.0001
USDJPY JPY 0.01
AUDUSD USD 0.0001
USDCHF CHF 0.0001
NZDUSD USD 0.0001
USDDKK DKK 0.0001
USDSEK SEK 0.0001
USDNOK NOK 0.0001
USDHKD HKD 0.0001
USDBRL BRL 0.0001
USDCNH CNH 0.0001
USDCZK CZK 0.0001
USDHUF HUF 0.01
USDILS ILS 0.0001
USDIDR IDR 1
USDINR INR 0.01
USDKRW KRW 0.01
USDMXN MXN 0.0001
USDMYR MYR 0.0001
USDNGN NGN 0.01
USDPLN PLN 0.0001
USDRON RON 0.0001
USDRUB RUB 0.0001
USDSGD SGD 0.0001
USDTRY TRY 0.0001
USDZAR ZAR 0.0001

6. ^ Fenics MD http://www.fenicsmd.com/products/rates/. Retrieved 16 March 2020. Missing or empty `|title=` (help)CS1 maint: discouraged parameter (link)