What Is Pip?
A pip (percentage in point) is the smallest standardized price movement for a given trading pair. In forex, a pip is typically the fourth decimal place (0.0001). In crypto, the concept varies by pair — for BTC/USD, a pip might be $0.01, while for smaller altcoins it could be $0.00000001.
How Pip Works
Pip value depends on position size and the trading pair. Knowing the dollar value of each pip allows precise calculation of profit targets and stop-losses. For a 1 BTC position where a pip equals $0.01, moving 100 pips ($1.00) means a $1.00 gain or loss. This granularity matters more for scalpers and day traders than swing traders.
Why It Matters for Traders
While "pip" is used less frequently in crypto than in forex, understanding minimum price increments is essential for order placement. Knowing the tick size (minimum price increment) helps you place limit orders at valid price levels, calculate precise risk-reward ratios, and understand the true cost of the bid-ask spread in pip terms.