Master pip value calculations to know exactly how much each pip movement affects your account. Essential knowledge for every forex trader.
A pip (Point in Percentage) is the smallest price movement in a currency pair. For most major pairs, a pip is the fourth decimal place (0.0001). Understanding pip value is crucial because it determines how much profit or loss you make for each pip the market moves in your favor or against you.
Many traders focus on entry and exit points but ignore pip values. This leads to poor risk management and unexpected losses. Knowing your pip value before entering a trade is essential for proper position sizing.
Pip Value = (Pip Size × Trade Size) / Exchange Rate
Pair: EUR/USD at 1.1000
Trade Size: 100,000 units (1 standard lot)
Pip Size: 0.0001
Account Currency: USD
Pip Value = (0.0001 × 100,000) / 1 = $10
Pair: GBP/JPY at 150.00
Trade Size: 100,000 units (1 standard lot)
Pip Size: 0.01 (JPY pairs)
Account Currency: USD
Pip Value = (0.01 × 100,000) / 150.00 = $6.67
Your pip value depends on your account currency. If you're trading EUR/USD with a USD account, the calculation is straightforward. But if your account is in EUR, GBP, or another currency, you need an additional conversion step.
Manual pip value calculations can get complex, especially with cross-currency pairs and different account currencies. Our pip value calculator handles all the conversions automatically.
Try Pip Value Calculator| Lot Type | Units | EUR/USD Pip Value | Risk Example |
|---|---|---|---|
| Standard Lot | 100,000 | $10 | 50 pip SL = $500 risk |
| Mini Lot | 10,000 | $1 | 50 pip SL = $50 risk |
| Micro Lot | 1,000 | $0.10 | 50 pip SL = $5 risk |
| Nano Lot | 100 | $0.01 | 50 pip SL = $0.50 risk |
JPY pairs (like USD/JPY, EUR/JPY) use 2 decimal places, not 4. A pip is 0.01, not 0.0001.
Trading EUR/USD with a GBP account? You need to convert the pip value from USD to GBP.
Assuming you're trading a standard lot when you're actually trading mini lots leads to 10x calculation errors.
Setup: You want to risk $100 on a EUR/USD trade
Stop Loss: 50 pips from entry
Account: $10,000 USD
Question: What lot size should you trade?
Solution:
$100 risk ÷ 50 pips ÷ $10 per pip = 0.2 lots
This means trading 20,000 units (2 mini lots)
Understanding pip values is fundamental to successful trading. Combined with proper position sizing and risk management, this knowledge forms the foundation of profitable trading strategies.
Skip the manual calculations. Our pip value calculator handles all currency pairs and account currencies automatically.
Calculate Pip Values →Combine pip value knowledge with proper position sizing to manage your risk like a professional trader.
Position Sizing Guide →Download this guide as PDF for offline review and reference.
