What is a pip?
A pip is the smallest standard price movement of a currency pair, and for most majors it is the fourth decimal place. EUR/USD moves from 1.0850 to 1.0851 — that is one pip up. The exceptions are the yen pairs, where a pip is the second decimal place (USD/JPY 152.34 to 152.35 = one pip).
On most modern apps the price also shows a fifth decimal (a “pipette” = one-tenth of a pip) so you will see EUR/USD quoted as 1.08501. The fifth decimal is for precision pricing — it does not change the definition of a pip.
Why pips matter for forex app users
Every spread your broker quotes is denominated in pips, and every position size you set is a wager on how many pips the price moves before you exit.
The maths: on a standard lot (100,000 units), one pip is worth approximately $10 on EUR/USD. On a mini lot (10,000 units), one pip is worth $1. On a micro lot (1,000 units), one pip is worth $0.10.
So a 1.0-pip EUR/USD spread on a 0.10-lot (mini-lot) trade is a $1 cost to enter. On eToro, where the EUR/USD spread is typically 1.0 pip, a 0.10 lot trade costs $1 on the way in. On Pepperstone’s Razor account (0.09-pip average spread + $3.50/side commission), the same trade costs about $0.09 spread + $0.35 commission = $0.44 total — less than half.
Worked example
| Scenario | Position | Spread | Pip value | Entry cost |
|---|---|---|---|---|
| eToro, EUR/USD | 0.10 lot (10K) | 1.0 pip | $1/pip | $1.00 |
| Pepperstone Razor, EUR/USD | 0.10 lot (10K) | 0.09 pip + $3.50/side | $1/pip | $0.09 + $0.35 = $0.44 |
| OANDA Core, EUR/USD | 0.10 lot (10K) | 0.2 pip + $5/100K | $1/pip | $0.20 + $0.50 = $0.70 |
The same trade costs 2–3 times as much on a spread-only “commission-free” account vs a raw-spread + commission ECN account at the same position size.
See also: Spread · Lot · Leverage
Used in: eToro review · OANDA review · MT4 vs MT5 mobile