It's pretty simple actually. PIP stands for percentage in point. It's the smallest increment of trade in FX. In this market, prices are quoted to the fourth decimal point. For the example, if a bar of soap in the drugstore was priced at a dollar 20, in the FX market, the same bar of soap would be quoted at 1.2000. The change in that fourth decimal point is called 1 pip and it's typically equal to 1/100th of 1%.