Forex basics2 min read
What is a pip, and what is it worth?
Pips, lots and pip value explained with simple examples, including pairs quoted in yen and accounts in a different currency.
Stop losses, targets and results in forex are usually measured in pips. To know what a trade can make or lose in money, you need to know what one pip is worth on your position.
What is a pip?
A pip is the standard unit of price movement in a currency pair. For most pairs it is the fourth decimal place: 0.0001. If EUR/USD moves from 1.0840 to 1.0841, it has moved one pip.
Pairs quoted in Japanese yen are the exception. Their pip is the second decimal place, 0.01, so USD/JPY moving from 150.25 to 150.26 is one pip.
Many brokers quote one extra digit, such as 1.08405. That fifth digit is a pipette, a tenth of a pip.
Lots and units
Position sizes are measured in lots:
- A standard lot is 100,000 units of the base currency
- A mini lot is 10,000 units (0.1 lots)
- A micro lot is 1,000 units (0.01 lots)
What one pip is worth
In the pair's quote currency (the second currency in the pair), pip value is simply pip size × number of units.
For one standard lot of EUR/USD: 0.0001 × 100,000 = $10 per pip. A mini lot is worth $1 per pip and a micro lot 10 cents. If your account is in US dollars, that is the number you need.
When your account is in a different currency
If the quote currency is not your account currency, the pip value has to be converted at the current exchange rate.
- USD/JPY on a USD account: one lot is 0.01 × 100,000 = ¥1,000 per pip. At a USD/JPY price of 150, that is ¥1,000 ÷ 150 = $6.67 per pip.
- EUR/GBP on a USD account: one lot is 0.0001 × 100,000 = £10 per pip. At a GBP/USD price of 1.27, that is £10 × 1.27 = $12.70 per pip.
Because exchange rates move, the pip value of these pairs changes slightly from day to day.
What about gold?
Gold (XAU/USD) is quoted in dollars per ounce, and one lot is usually 100 ounces. Brokers define a gold pip differently; in our tools one pip is a $0.10 move, worth $10 per lot. Always check your own broker's contract specification.
Why it matters
Pip value is what turns a stop loss in pips into money. It is the missing piece in choosing your position size: once you know what a pip is worth, you can size every trade so that hitting the stop costs exactly what you planned.
Try any pair and account currency in the calculator below.
Risk note: trading forex carries a high level of risk and may not be suitable for everyone. This article is for education only and is not financial advice.
Value of 1 pip
$6.67
for 1 lots of GBP/JPY
Per lot type
- Standard lot$6.67
- Mini lot$0.67
- Micro lot$0.07
1 pip on GBP/JPY = 0.01 in price.
Trade with a plan
Join the free ForexBob channel: every signal comes with its entry, stop loss and targets.
More articles
Forex basics3 min read
Standard, mini and micro lots explained
What a lot is, how much each size is worth per pip, and why the right lot size changes on every trade.
Read articleRisk management3 min read
Leverage and margin explained, without the jargon
How leverage works, what margin and a margin call are, and why leverage doesn't decide your risk. Your position size does.
Read articleRisk management3 min read
Drawdowns and losing streaks: what's normal and how to survive them
Even a good strategy hits long losing streaks. The odds of 5, 8 or 10 losses in a row, and the rules that stop a drawdown becoming a disaster.
Read article