Subject:

The pip (the equivalent of a tick in most other asset classes) value varies depending on the particular currency pair and the amount of cash being traded.

## Understanding Tick Charts

The definition of a pip is; the smallest price change that a given exchange rate can make. Since most major currency pairs are priced to four decimal places, the smallest change is that of the last decimal point (for most pairs this is the equivalent of 1/100th of one percent, or one basis point).

As a result of this, the value of a pip is going to be dependent on the quantity that is being traded. In order to determine the pip value a trader needs to know the following information:

- The quantity being traded
- The execution price
- The price increment

To determine the order's pip value, simply multiply the FX order size by the currency pair's increment.

For example, EUR.USD typically trades in increments of 0.0001.

If you were to place an order for 100,000 EUR.USD, multiply the order size of 100,000 times the increment of 0.0001. This results in a pip value of USD 10 per pip. For a USD.JPY pair order that has a price increment of .01, the pip value would be JPY 1,000 per pip (USD.JPY 100,000 times 0.01).

Please note, the first currency in an FX pair is the order's transaction currency and the second one is the settlement currency.

The pip value is an amount of the settlement currency. For more information, please visit the IBKR Knowledge Base articles for Settlement currency and Transaction currency.