The term pip is an acronym for percentage in points and is used to measure the change in exchange rates on the forex market. A single pip represents the smallest possible decimal change a currency quote may move, and it is the standard on which profit and loss are calculated. Currencies are quoted in decimal format to 1/1,000th of a percent unless the currency pair contains the Japanese yen. Currencies quoted against the Japanese yen are in decimal format to 1/100th of a percent. Using a quote for GBP/USD as an example, a change in price from $1.5600 to $1.5650 represents a change of 50 pips.
