Pips and pipettes explained

How it works

For many pairs, one pip is the fourth decimal place; for many yen pairs it is the second. Some platforms quote an extra decimal, often called a pipette or fractional pip.

What to check

Use the pair's actual quoting convention rather than assuming every market uses the same decimal place. Pip value also changes with position size and, in some cases, account currency.

• Check the pair's decimal convention
• Separate pip movement from cash P&L
• Account for position size

Limits and risks

A pip is a price unit, not a fixed amount of money. Saying a trade gained 20 pips does not reveal the financial result without knowing the size of the position.