What Is a Pip in Forex, and How Much Is a Pip Worth?

A pip is the standard unit for measuring how far an exchange rate has moved. For most currency pairs it is the fourth decimal place, 0.0001; for pairs quoted in Japanese yen it is the second decimal place, 0.01. The word is usually said to stand for "percentage in point" or "price interest point".

Most brokers quote one digit more than the pip. That fifth decimal on EUR/USD, or third on USD/JPY, is a pipette: a tenth of a pip. In the quote 1.10253, the 5 is the pip digit and the final 3 counts pipettes.

A pip is a fixed amount of price, not a percentage. 25 pips on EUR/USD at 1.1000 is a move of about 0.23%; 25 pips on USD/JPY at 150.00 is about 0.17%.

What a pip is worth depends on three things: the pip size, the size of the position, and the exchange rate between the pair's quote currency and your account currency.

One standard lot of a currency pair is 100,000 units of the base currency, the first currency in the pair. Profit and loss are always earned in the quote currency, the second one. The first part of the formula gives the pip value in the quote currency; the conversion turns it into the currency your account is held in.

When the pair is quoted in your account currency

EUR/USD, GBP/USD, AUD/USD, NZD/USD and gold are quoted in US dollars. In a USD account no conversion is needed: 0.0001 × 100,000 = $10 per pip per lot, whatever the exchange rate. This is where the familiar "$10 a pip" comes from.

When your account currency is the base currency

USD/JPY is quoted in yen, so a pip is 0.01 × 100,000 = ¥1,000 per lot. To express that in dollars, divide by the USD/JPY rate: at 150.00, ¥1,000 ÷ 150 = $6.67. USD/CHF and USD/CAD work the same way: CHF 10 ÷ 0.80 = $12.50, and C$10 ÷ 1.40 = $7.14.

When neither currency is your account currency

For EUR/JPY or GBP/JPY in a USD account, the ¥1,000 is converted at USD/JPY, so a pip is also $6.67 at 150.00. For EUR/GBP, £10 is converted at GBP/USD: at 1.2500, $12.50. In every case, convert from the quote currency into the account currency at the rate between those two currencies.

For an account in another currency, convert the dollar figure at your account currency's rate. A EUR/USD pip is $10 ÷ 1.10 = €9.09 per lot in a euro account, and $10 ÷ 1.25 = £8.00 in a sterling account.

The rates are round numbers so you can check the arithmetic by hand. The calculators fill in current reference rates, which you can replace with your broker's quote.

EUR/USD, 0.30 lots, USD account

You buy 0.30 lots of EUR/USD at 1.1000 and the price rises to 1.1045.

USD/JPY, 0.50 lots, USD account

USD/JPY is at 150.00 and you hold 0.50 lots.

The yen profit is converted at the rate when you close. A long from 150.00 to 150.30 earns ¥15,000, which is $99.80 at 150.30, so the realised profit is a little below the estimate. For planning, the pip value at the current rate is accurate enough; the next section shows how much it moves when the rate moves further.

Gold (XAU/USD), 0.01 lots

One lot of gold is 100 troy ounces, so 0.01 lots is 1 ounce. You buy 0.01 lots at $4,000.00 and the price rises to $4,025.00.

The quickest way to think about gold is per dollar of movement: each $1.00 move is worth $1 on 0.01 lots, $10 on 0.10 lots and $100 on 1.00 lot, whatever you call a pip. If your platform counts $0.01 as a gold pip, the same move is 2,500 pips worth $0.01 each on 0.01 lots: still $25.

For a pair quoted in your account currency, pip value is fixed. For every other pair it moves with the conversion rate. A USD/JPY pip in a dollar account is worth less as USD/JPY rises, because each yen buys fewer dollars:

The same applies to EUR/USD in a euro account: a pip is €9.09 per lot at 1.10 and €8.33 at 1.20. A lot size worked out for USD/JPY at 140 is therefore slightly smaller than it needs to be at 160, which is why the calculators use the current rate rather than a fixed pip value.

Three units are easily confused, and each mix-up is a factor of ten.

• Pipette: a tenth of a pip, the last digit of a five-digit quote (or three-digit yen quote): 0.00001 on EUR/USD and 0.001 on USD/JPY.
• Point in MT4 and MT5: the smallest price step the platform shows. On a five-digit forex quote that is the pipette, so a 20-pip stop is 200 points in the order window, and a spread shown as 12 points is 1.2 pips.
• Point on index and crypto CFDs: usually a 1.0 move in the price, for example from 30,000 to 30,001 on NAS100. On a contract worth $1 per point, a point is worth $1 per lot.

When a stop, a spread or a swap rate is given in "points", check which of these is meant before using it in a calculation.

• Using $10 a pip for every pair. It is only true for pairs quoted in your account currency. A USD/JPY pip is $6.67 at 150.00; a EUR/GBP pip is $12.50 with GBP/USD at 1.25.
• Counting yen pips on the wrong decimal. USD/JPY moving from 150.00 to 151.00 is 100 pips, not 1 or 10,000.
• Reading MT4/MT5 points as pips. A 50-point stop on EUR/USD is 5 pips, not 50.
• Mixing gold conventions. Measuring a stop in $0.01 pips and valuing it at $10 a pip makes the risk look ten times larger than it is; the reverse makes it look ten times smaller.
• Forgetting the conversion in a non-USD account. A EUR/USD pip in a euro account is €9.09 per lot at 1.10, not €10.
• Assuming every index lot is the same. $1, $10 and $0.10 per point all exist; check the contract size in your platform.

Pip value is the input most likely to be wrong in a lot size calculation. The lot size guide shows how it feeds into the size of a trade.