The short answer
A pip is a small, standard step in a price, used to measure how far it has moved. In currency trading it is usually the fourth decimal place, 0.0001, or 0.01 for pairs quoted in Japanese yen. A move in EUR/USD from 1.1000 to 1.1050 is 50 pips.
Pips in gold and oil
Commodities have no single pip standard. Some brokers treat 0.10 as one pip for gold, others 0.01, and some platforms call 0.01 a point. For WTI and Brent CFDs a pip is usually 0.01. The same price move can therefore be described as a different number of pips by different brokers, so always read the contract specification.
What one pip is worth
Pip value = pip size x contract size x lots. A standard gold lot is often 100 troy ounces. With a pip of 0.10 one pip is worth $10 per lot, and a $1 move in the price is worth $100 per lot. For crude oil a lot is often 1,000 barrels, so a 0.01 pip is worth $10 and a $1 move is worth $1,000.
Pips, points and ticks
A tick is the smallest price step an exchange allows, for example $0.01 per barrel for crude oil futures. A pip or point is a unit defined by the broker. They often coincide but not always.
Why pips matter
Pips let traders compare moves, size stop losses and calculate profit and loss in a common way. Knowing the dollar value of a pip for your lot size shows how much a given stop distance risks.
Related:Pip calculatorPosition size calculatorProfit calculator
Educational content, not investment advice.