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What Is A Pip?

A pip (percentage in point) is the smallest unit in an exchange rate.

Most major currencies quote prices to four decimal places. That fourth decimal place is the pip, the lowest change possible, and the unit in which a trader counts profit or loss. The Japanese yen, however, quotes to five decimal places. Fractional pips appeared with the influx of electronic trading platforms, allowing for price quotes displayed to 1/10 of a pip.[1]