What Is Pip?

As an illustrative example, take EUR/USD at 1.2635. If the sell price were to increase to 1.2636 we have a one pip increase. Should the EUR/USD sell price move from 1.2635 up to 1.2735, we say EUR/USD increased 100 pips.

In the example of EURUSD, one pip is worth 1/100th of a US Dollar cent. Because currency traders are concerned with relatively small movements in the forex market, traders talk about that movement in terms of pips.