Refers to a standardized unit of change in the price of a trading instrument. Initially, when only 4-digit pricing was available, it was the smallest unit of price change. With the introduction of more accurate 5-digit pricing, 1 pip is still calculated by the 4th digit (0.0001). The smallest unit is now referred as to point (0.00001). In 5-digit pricing 1 pip is equal to 10 points. Example: When the price for EUR/USD currency pair changes from 1.11635 to 1.11646, it means the price has changed in 1.1 pips or 11 points. For USD/JPY currency pair, which has 3-digit pricing, a change from 123.857 to 123.865 means that the price has grown in 0.8 pips or 8 points.