A pip is the standard unit of price movement for a currency pair: for most pairs it is the fourth decimal place, 0.0001, and for pairs quoted in Japanese yen it is the second decimal place, 0.01. If EURUSD moves from 1.1000 to 1.1025, it has moved 25 pips; if USDJPY moves from 150.00 to 150.40, it has moved 40 pips. Traders measure stop losses, take profits, spreads and results in pips because a pip means the same price distance on every pair with the same quoting convention, regardless of account size. What a pip is worth in money depends on how much you trade: on a standard lot of 100,000 units of a pair quoted in US dollars, one pip is worth 10 dollars. One detail causes real problems in automated trading: most brokers quote one extra decimal place, so the smallest price step - a "point" - is a tenth of a pip. An Expert Advisor that confuses points with pips places its stops ten times closer or farther than intended.
Pip size by pair
The size of one pip depends only on how the pair is quoted, not on its price.
| Pair type | Example quote | 1 pip | 1 point (fractional quote) |
|---|---|---|---|
| Most pairs (EURUSD, GBPUSD, AUDUSD...) | 1.10253 | 0.0001 | 0.00001 |
| Yen pairs (USDJPY, EURJPY...) | 150.253 | 0.01 | 0.001 |
Gold, indices and other CFDs have no single market-wide pip convention - each broker defines the price step and contract size for its own symbol, so check the symbol's specification in your platform before setting a stop in "pips" on them.
Pips vs. points: the detail that breaks EAs
A point is the smallest price increment a broker quotes, and on a 5-digit (or 3-digit yen) quote one pip equals ten points. MetaTrader works in points internally, so code that sets "a 20-point stop" when the author meant 20 pips ends up with a 2-pip stop - often too close for the broker to accept, which is one cause of the Invalid Stops error. AlgoPuzzle's exported Expert Advisors take stop loss and take profit in pips and convert them using the symbol's own digits: on a 3- or 5-digit symbol one pip is ten points, on a 2- or 4-digit symbol it is one point. The cTrader version uses the platform's built-in pip size for the symbol.
Lot sizes
A lot is a standard trade size, and the pip value scales directly with it.
| Lot | Units of base currency | MetaTrader volume | 1 pip on EURUSD |
|---|---|---|---|
| Standard | 100,000 | 1.00 | $10.00 |
| Mini | 10,000 | 0.10 | $1.00 |
| Micro | 1,000 | 0.01 | $0.10 |
How to calculate the value of a pip
Pip value is the pip size multiplied by the number of units traded, expressed in the pair's quote currency and then converted to your account currency if they differ.
- Multiply pip size by units. EURUSD, one standard lot: 0.0001 × 100,000 = 10 US dollars.
- If the quote currency is not your account currency, convert it. USDJPY, one standard lot: 0.01 × 100,000 = 1,000 yen per pip. At an example rate of 150 yen per dollar, that is 1,000 / 150 ≈ 6.67 dollars - and it changes as the rate changes.
- Multiply by the stop distance. A 30-pip stop on one standard lot of EURUSD risks about 30 × $10 = $300, before spread and commission.
That last step is the core of position sizing: decide the money you are willing to lose, divide by the stop distance in pips and the pip value, and the result is the lot size.
Common questions
What is a pip in forex?
A pip is the standard unit of price movement for a currency pair. For most pairs it is the fourth decimal place, 0.0001; for pairs quoted in Japanese yen it is the second decimal place, 0.01.
What is the difference between a pip and a point?
A point is the smallest price step a broker quotes. Most brokers quote currency pairs to one extra decimal place (5 digits, or 3 for yen pairs), so on those symbols one pip equals ten points. Confusing the two makes a stop loss ten times tighter or wider than intended.
How much is one pip worth?
It depends on the trade size and the pair. On a pair quoted in US dollars, such as EURUSD, one pip on a standard lot of 100,000 units is worth 0.0001 x 100,000 = 10 dollars; on a mini lot it is 1 dollar and on a micro lot 10 cents. For other pairs the value has to be converted at the current exchange rate.
What is a lot in forex?
A lot is a standard trade size. A standard lot is 100,000 units of the base currency, a mini lot 10,000 units and a micro lot 1,000 units. In MetaTrader a volume of 1.00 is one standard lot and 0.01 is one micro lot.