If you hold aspirations to become a great Forex trader one day, then you certainly need to have a sound knowledge on the basic idea of and all the jargons commonly used in the trade. The word "Pip" is very commonly used in the market, and it actually stands for "Percentage In Point".
he Pip is commonly defined as the smallest price movement of a certain currency. It is placed at almost four decimal points, and the only exception being the Japanese Yen that has a Pip of only two decimal points. The value of 1 Pip for all the other currencies is about 0.0001 cent. Suppose you are dealing in a currency with a value of about 1.4012 and it increases to about 1.4016, then the currency is said to have moved by 4 Pips.
The usage of Pip is universal except for the Japanese Yen. So, whenever you start trading with the Yen, make sure you include this information in your calculations. The "bid" and the "ask" price in the market tend to closely rely on the Pip value. So, keep this fact close to your mind always. Even the minutest changes in the Pip value can shift the market up or down. Therefore, do not ignore the figures under any circumstances.
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