Forex Pip
The smallest standard price movement in a forex pair, used to measure exchange rate changes and profit and loss.
What is Pip?
A pip (percentage in point or price interest point) is the smallest standardized unit of price movement in a foreign exchange rate quote. For most currency pairs, one pip equals 0.0001 (the fourth decimal place). For example, if EUR/USD moves from 1.0800 to 1.0801, the rate has moved one pip. For Japanese yen pairs (e.g., USD/JPY), one pip equals 0.01 (the second decimal place) because the yen is quoted in larger nominal units. Many brokers now quote prices to a fifth decimal place, creating "pipettes" equal to one-tenth of a pip. Pips are used to measure spreads, trading costs, and profit and loss in forex trading.
Example
A trader buys one standard lot of GBP/USD (100,000 units) at 1.2650. If GBP/USD rises 50 pips to 1.2700, the trader's profit is 50 × $10 = $500 (each pip on a standard GBP/USD lot is worth $10). If the spread on the trade was 2 pips, the effective profit after the spread cost would be 48 pips × $10 = $480.
Source: Bank for International Settlements — FX Market Structure