A pip, short for “percentage in point” or “price interest point,” is the smallest price movement a currency pair can make in forex trading. In most cases, it represents a change in the fourth decimal place of a currency price. For example, if EUR/USD moves from 1.1000 to 1.1001, that’s a one-pip movement. Understanding pips is crucial because they determine how much profit or loss we make per trade. But there’s more to it than just a number—keep reading to learn how pips work, how to calculate them, and why they’re a big deal in forex trading.
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