A "pip" is a term used in the world of finance, particularly in forex trading, to denote the smallest price movement that a currency pair can make. Typically, a pip is equal to 0.0001 for most currency pairs, meaning that if the price of a currency pair moves from 1.1000 to 1.1001, it has moved one pip. This measurement helps traders quantify changes in exchange rates and assess their potential profits or losses. In addition to forex, pips are also relevant in other financial markets, such as commodities and stocks. Understanding pips is essential for traders, as they provide a standardized way to measure price fluctuations. By tracking pips, traders can make informed decisions about their investments and manage their risk effectively.