<p><strong>Pip</strong> is the smallest standard price move in a currency pair, typically measured in the fourth decimal place for most pairs, and in the second decimal place for Japanese Yen pairs.</p>
<p>Pips matter to Forex traders as they determine the smallest price change that can occur, and thus the smallest profit or loss that can be made on a trade. For example, if a trader buys a currency pair at 1.2000 and sells it at 1.2005, they have made a profit of 5 pips.</p>