The pip is the smallest trading unit in forex markets. It’s worth one ten thousandths of a counter currency unit. And we CALL it a pip because that stands for Percentage In Point. It’s sometimes called a Basis Point, which is a hundredth of a percent. IN Yen pairs, though, the Pip is located in the 2nd place after the decimal point, mainly because the yen is smaller than most other currencies by about a hundredth. In these pairs, of course, a pip and a basis point are not the same thing. Now remember – a pip in the euro-USD pair and a pip in the Euro-pound pair are not the same thing. In the first – it’s worth a hundredth of a cent; in the second – a hundredth of a penny. But in most case, it gives you an idea of just how stable the forex market is. On an average day, we’re looking at a 13 to 60 pip movement – less than a cent. When we’re trading, though, we’re looking at the chart, but we need to know how that’s affecting our pocket. Calculating gains and losses is actually quite simple. It’s equal to the change in the asset’s value times the value of the pip times our position size and finally translated into our account currency. For a 1-lot position – that’s 100,000 units of the forex pair, each pip is worth 10 units of the counter currency, which in the Euro-USD pair means $10. Let’s say we’re looking at a 30 pip movement, that means we’ve made 300 US dollars. If our account is – for example – in Australian dollars we’re looking at 433 Australian dollars. So, yes. The pip is a small unit but in large quantities it really does make a difference. Next up, the tick – sometimes smaller, sometimes bigger., but DEFNITELY not the same thing.