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You regularly hear the word pips when it comes to foreign exchange trading. But ever wondered what are the pips and how they are calculated? The term pips literally means the littlest price change. What’s the smallest change is outlined by brokers and it is used in programs like Pip Android. As an example, in EURUSD currency pair, the prices are shown in 4 decimal digits. That implies a pip is 0.0001. But some brokers sometimes use 5 digits, in which case a pip changes accordingly . What is the use to add pips, you can wonder. Why not count profit and loss in real money without additional calculations? Well, pips allow traders to speak in same terms without exposing their actual monetary investments. That is an exceedingly important aspect.