In short
- A pip is 0.0001 for most currency pairs and 0.01 for yen pairs.
- Many platforms quote a fifth (or third) decimal, called a pipette, worth one tenth of a pip.
- Standard, mini and micro lots are 100,000, 10,000 and 1,000 units of the base currency.
- Pip value = pip size × units, converted into your account currency.
What a pip is
"Pip" is short for percentage in point or price interest point. It is the conventional smallest meaningful move in a currency pair's price.
| Pair type | Example quote | One pip |
|---|---|---|
| Most pairs | EUR/USD 1.0850 | 0.0001 |
| Yen pairs | USD/JPY 150.25 | 0.01 |
Most platforms now show one more decimal place, such as EUR/USD 1.08503. That extra digit is a pipette, or fractional pip, worth one tenth of a pip. When a spread is shown as 0.8, it means eight tenths of a pip.
What a lot is
| Lot | Units | Written as |
|---|---|---|
| Standard | 100,000 | 1.00 |
| Mini | 10,000 | 0.10 |
| Micro | 1,000 | 0.01 |
The units are always of the base currency, the first one in the pair. One lot of GBP/USD is £100,000; one lot of USD/JPY is $100,000.
Calculating pip value
Then convert into your account currency
Case 1: the dollar is the quote currency
EUR/USD, 1 standard lot: 0.0001 × 100,000 = $10 per pip. No conversion needed for a dollar account.
Case 2: the dollar is the base currency
USD/JPY at 150.00, 1 standard lot: 0.01 × 100,000 = ¥1,000 per pip. Converted: 1,000 ÷ 150 = $6.67 per pip. As USD/JPY rises, the dollar value of a pip falls.
Case 3: a cross pair
EUR/GBP, 1 standard lot: 0.0001 × 100,000 = £10 per pip. With GBP/USD at 1.27, that is 10 × 1.27 = $12.70 per pip.
The pip value calculator handles all three cases.
From pips to profit and loss
Example: you buy 0.30 lots of EUR/USD at 1.0850 and close at 1.0812. The price moved 38 pips against you. Loss = 38 × $10 × 0.30 = $114, plus costs.
Why this matters for risk
Knowing pip value in advance means you know what a stop-loss costs before you enter a trade. Traders who skip this step often size positions by feel and discover the real risk only when a trade goes wrong. The position size calculator works backwards from the amount you want to risk; risk management for traders explains why that matters.
Gold and other instruments
The same logic applies to gold, indices and commodities, but contract sizes and tick sizes differ by instrument and provider. For gold, one lot is usually 100 ounces; see gold trading. Always check the contract specification.
Frequently asked questions
What is 1 pip in forex?
For most currency pairs, one pip is 0.0001. For pairs involving the Japanese yen, it is 0.01.
What is the difference between a pip and a pipette?
A pipette is one tenth of a pip: the fifth decimal place on most pairs, or the third on yen pairs.
How many units is 0.01 lot?
0.01 lot is a micro lot: 1,000 units of the base currency.
What are pips in forex?
Pips in forex are the standard unit of price movement: 0.0001 on most pairs and 0.01 on yen pairs.