Hey everyone! Quick breakdown today on one of the most fundamental concepts in forex trading: What is a Pip? If you're just starting out, all these small decimal points can feel a bit confusing, but it’s actually super simple once you see it visually. What is a Pip? PIP stands for "Percentage in Point" or "Price Interest Point." In plain English, it’s the standard unit used to measure the smallest price movement an exchange rate can make. For most currency pairs, it's the 4th decimal place (0.0001). Breaking Down the Example (GBP/USD) Take a look at the image above: Bid Price: 1.3089 Ask Price: 1.3091 The last digit in orange (9 and 1) represents the pips. When you subtract the Bid from the Ask: 1.3091 - 1.3089 = 0.0002 (or 2 pips). That difference between the buy and sell price is what we call the Spread—which is effectively the cost of opening the trade. Why Does This Matter? Position Sizing: Knowing pip values helps you calculate your risk before entering a trade. Profit & Loss: Your gains or losses are calculated based on how many pips the market moves for or against your position. Mastering how pips work is your first step toward solid risk management.