A pip is a unit used to measure the change in value between two currencies.
For most currency pairs, a pip represents the last decimal place of the price quote.
How pips work
Most currency pairs are quoted to 4 decimal places
Japanese yen (JPY) pairs are quoted to 2 decimal places
Examples
EUR/USD
1 pip = 0.0001
Example: EUR/USD moves from 1.1000 to 1.1001
USD/JPY
1 pip = 0.01
Example: USD/JPY moves from 150.00 to 150.01
Summary
A pip shows how much a currency price has moved. It is used to calculate profits, losses, spreads, and risk.