It represents the fourth decimal digit to the right of the pair’s exchange rate, and everything has a special unit of measurement. Just as the unit of measurement of distance is the meter and the unit of weight is the kilo, the PIP is the unit of measurement of price movement.

In the forex market, a pip is calculated mathematically as $0.0001, meaning that every 1000 pip equals $1. In the same way, a pip equals 1/100 of a cent, meaning that every 100 pip equals 1 cent.

 Example
The EURUSD pair Has risen from 1.1620 to 1.1630, thus it has risen by 10 pips or 10 PIPS.
According to the previous example, you can calculate the amount of PIPS on any currency pair that ends in the dollar in Forex.

 How to know the value of a PIP when trading forex?
The PIP value varies depending on the currency pair and the lot size of the trading contract,
For pairs that end in USD, such as: EURUSD, CADUSD, NZDUSD, and the PIP value can be calculated using the following formula:
– Pip value = contract size x (0.0001 ÷ exchange rate for the quote currency).

As for the pairs that end in Japanese yen JPY, such as: CADJPY, CHFJPY, GBPJPY, they can be calculated using the following formula:
– Pip value = contract size x (0.01 ÷ exchange rate).

• Note: currency pairs that do not end in the dollar currency, ie the quote currency is not a dollar, the currency must be converted after calculating the point to the dollar.