How to Calculate Pip Value in Forex (With Examples)

Pip value tells you how much money you gain or lose when a currency pair moves by one pip. It is the link between a chart move and your account balance, and you need it to size positions correctly. This guide explains what a pip is, gives the formula, and works through examples for the pairs most traders use.

What is a pip?

A pip is the standard unit of price movement in forex. For most pairs it is the fourth decimal place, 0.0001. If EUR/USD moves from 1.0850 to 1.0851, it has moved one pip. For pairs quoted in Japanese yen, a pip is the second decimal place, 0.01, so USD/JPY moving from 151.20 to 151.21 is one pip.

Many platforms, including TradeLocker, show an extra decimal called a pipette, or fractional pip, equal to one tenth of a pip.

Lot sizes

• Standard lot: 100,000 units of the base currency
• Mini lot: 10,000 units (0.1 lots)
• Micro lot: 1,000 units (0.01 lots)

The pip value formula

Pip value = (pip size ÷ exchange rate) × position size

The result is in the base currency of the pair. If your account is in a different currency, you convert it. There is a quicker rule for the most common case:

• When USD is the quote currency (EUR/USD, GBP/USD, AUD/USD), one standard lot is always worth $10 per pip, a mini lot $1 and a micro lot $0.10, for a USD account.

Worked examples

EUR/USD (USD is the quote currency)

One standard lot: 0.0001 × 100,000 = $10 per pip. If you buy 0.5 lots and price rises 30 pips, you make 30 × $5 = $150.

USD/JPY (JPY is the quote currency)

One standard lot: 0.01 × 100,000 = ¥1,000 per pip. To convert to dollars, divide by the USD/JPY rate. At 150.00, ¥1,000 ÷ 150 = about $6.67 per pip. Because the conversion uses the current rate, pip value on yen pairs changes slightly as price moves.

USD/CAD (USD is the base currency)

One standard lot: 0.0001 × 100,000 = C$10 per pip. At a USD/CAD rate of 1.36, that is about $7.35 per pip.

GBP/JPY (a cross pair)

One standard lot is worth ¥1,000 per pip. Convert to USD using USD/JPY. At 150.00, again about $6.67 per pip. Cross pairs move further each day than most majors, so the dollar swings can still be large.

Gold (XAU/USD)

Gold is quoted differently. On most platforms one standard lot is 100 ounces and the common convention treats a $0.10 move as one pip, which is worth $10 per standard lot. A $1 move in gold is therefore $100 per standard lot. Check your platform's contract specification, because conventions vary between brokers.

Why pip value matters: position sizing

Once you know pip value, you can size every trade from the amount you are willing to risk:

Lots = amount at risk ÷ (stop-loss in pips × pip value per standard lot)

Example: a $2,000 account risking 1% ($20) with a 20-pip stop on EUR/USD gives $20 ÷ (20 × $10) = 0.10 lots. If the stop is hit, you lose about $20. Our guide to forex risk management explains why this habit matters more than any entry signal.

Pip value and costs

Spreads and commissions are measured in pips too. A 0.2-pip spread on one standard lot of EUR/USD costs about $2, plus any commission. Knowing pip value helps you compare trading costs; see forex spreads, commissions and fees.

Quick reference (USD account, 1 standard lot)

Values for pairs where USD is not the quote currency depend on the current rate, so treat these as examples. TradeLocker's built-in risk calculator works this out for you when you set a stop-loss; see how to use TradeLocker, or try the free calculators on our tools page.

Trading forex and crypto on leverage carries a high risk of loss and may not be suitable for all investors. This article is educational and not financial advice. Read our risk disclosure.