A Forex point or commonly called as pip is the smallest possible change in price. In a Forex market, earnings are based on points. For example, in a USD/CHF pair. A dollar is worth 1.2400 Swiss franc. The four decimal places is the standard value of Forex currency except for the Yen. The last digit of the price is known as the point or pip. So if the Swiss franc change from 1.2400 to 1.2401, you can say that the Swiss franc has risen one point.

It is important to understand the concept of a point since it is the basis of a trader’s earnings in the Forex market. The price of a point depends on how much the point have gone up or down.

In this article, a video is embedded to describe fully the price of a point. It includes simple calculation examples that are easy to understand. It gives a proper picture on how essential is the point or a pip and its role in the Forex market.