Glossary

Pip / point

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A pip is the fourth decimal place in most currency pairs (0.0001) and the second in JPY pairs (0.01). Many platforms also quote a finer unit, the point, which is one tenth of a pip. Gold is usually discussed in dollars and cents per ounce instead.

The cash value of a pip depends on pair, lot size, and account currency. Knowing it matters because stop distances are set in price units but risk is felt in money — the pip value is the exchange rate between the two.

Covered in depth in Lesson 03: Risikomanagement vor allem anderen.

Related terms

• Lot size — The unit that measures position size in forex and metals — one standard lot is 100,000 units of the base asset.
• Spread — The difference between the buy (ask) and sell (bid) price — the built-in cost of every round-trip trade.