Pip (percentage in point) is the minimum price change for four-digit quotes (or for two-digit quotes if JPY is present in the pair).

1 pip (point) is the smallest change in a currency quote, it does not matter in which direction the change occurs, up or down. For example, in the EUR / USD pair, the rate changed from 1.3614 to 1.3617, that is, by 3 points. The pip is equal to 0.0001 for the main nine currency pairs. For pairs where one of the currencies is Japanese yen, it is 0.01.

The fifth decimal place (as well as the third in the pair, where JPY is present) displays the discreteness of the price change within the four-digit (two-digit) quotes, that is, it shows the point change in the quote.

Quotes with five decimal places (five-digit quotes) increase the transparency of the market for the trader and allow you to conclude more profitable deals.

For example, instead of a spread of 2 points (1.503 0 Bid; 1.503 2 Ask), a trader can conclude a deal with a spread of 1.7 points (1.5030 1; Bid 1.5031 8 Ask).

In order to find out the value of a pip when using five-digit quotes, count 5 digits in the rate of the currency pair on the left.

For example, the EUR / USD rate is 1.00615.

We count the numbers starting from the first one: 1, 0, 0, 6, 1. “1” is the fifth digit in the quoted value and the fourth after the decimal point.

Thus, the value of 1 pip for the EUR / USD pair is 0.0001.

The last digit in a five-digit quote is a “fractional” point.

In our example, these are 8 and 1, that is, 1 “fractional” point is equal to 0.1 points.

To calculate the value of one point, use the following formula:

Example 1 . 0.1 standard lot EUR / USD at the rate of 1.33391.

To convert 0.07496 EUR to USD, multiply this value by the rate of the currency pair:

Here the value of the “fractional” point is $ 0.1. Therefore, 1 point is equal to 1 $. Example 2 . 0.1 standard lot of USD / JPY at the rate of 84.058.

Here the value of the “fractional” point is $ 0.1. This means that 1 point is equal to 1 $.

Go to FXOpen’s Official Website