What Is a Pip in Forex? Meaning, Value and Examples

Pip size by pair

“Pip” is short for “percentage in point” or “price interest point”; you’ll see both. What matters is where it sits in the price:

Pair type	Example quote	One pip is	One pipette is
Most pairs (EURUSD, GBPUSD, AUDUSD, USDCAD)	1.08452	0.0001 (the 4th decimal)	0.00001 (the 5th decimal)
Yen pairs (USDJPY, EURJPY, GBPJPY)	150.237	0.01 (the 2nd decimal)	0.001 (the 3rd decimal)

The quotes in the table are examples. Most platforms show one extra decimal beyond the pip. That last digit is the pipette, a tenth of a pip.

Pips, pipettes and points

MetaTrader 4 and 5 use a third word, point, for the smallest step a price can move. On a five-decimal EURUSD quote, one point is one pipette, so:

• 10 points = 1 pip;
• 100 points = 10 pips;
• a “200-point stop” = a 20-pip stop.

This trips people up when a tutorial says “set your stop 20 pips away” and they type 20 into a field that counts points. That puts the stop just 2 pips away. Check which unit a field uses before you rely on it.

How to count pips

Subtract the two prices and divide by the pip size. These are example prices:

• EURUSD from 1.08500 to 1.08730: 0.00230 ÷ 0.0001 = 23 pips.
• GBPUSD from 1.27410 down to 1.26960: 0.00450 ÷ 0.0001 = 45 pips.
• USDJPY from 150.250 down to 149.800: 0.450 ÷ 0.01 = 45 pips.

Whether those pips are a gain or a loss depends on the direction of your trade. If you bought and the price rose, they are in your favour; if you sold, the same move is a loss.

What a pip is worth

A pip’s money value depends on the pair and on your lot size. For pairs where the US dollar is the second currency, the value is fixed:

Position size	Value per pip (EURUSD, GBPUSD, AUDUSD, NZDUSD)
1.00 lot	USD 10
0.50 lot	USD 5
0.10 lot	USD 1
0.01 lot	USD 0.10

When the US dollar is the first currency, the pip is worth a fixed amount of the other currency, so its dollar value moves with the price:

• USDJPY: pip value per standard lot = 1,000 ÷ price. At 150.00, that’s about USD 6.67.
• USDCAD, USDCHF: pip value per standard lot = 10 ÷ price. At USDCAD 1.3700, that’s about USD 7.30.

For cross pairs without the dollar, such as EURGBP, a pip is worth 10 units of the second currency per standard lot (GBP 10), which you convert to dollars at the current rate. The pip value calculator does these conversions for you.

Pips on gold and other instruments

The pip convention comes from currency pairs. On gold (XAUUSD), sources disagree about what a pip is: some call a 0.01 move a pip, others 0.10, and some call a USD 1 move a pip. The money involved is the same whichever word you use. Our gold pip value guide sets the definitions side by side with a worked example.

For indices and other CFDs, brokers usually talk in points rather than pips. Check the contract details in the platform before you trade them.

Why pips matter for risk

Pips connect the chart to your account balance:

• Your potential loss = stop loss in pips × pip value. A 25-pip stop on 0.10 lots of EURUSD risks USD 25, plus costs.
• The spread is also measured in pips. On 0.10 lots, a 1.5-pip spread costs USD 1.50 the moment you open the trade.
• Leverage doesn’t change the value of a pip; lot size does. But leverage lets you open lot sizes where each pip is worth more than your balance can absorb.

If the loss at your stop is more than you’re prepared to lose, reduce the lot size rather than tightening the stop to an unrealistic level.

Pip value in naira, shillings or rand

Your account is probably in US dollars, so pip values come out in dollars. To see what a pip means in your own money, multiply by the exchange rate you actually got on your last deposit. If you deposited the naira equivalent of USD 20 and you are trading 0.01 lots on EURUSD, each pip is USD 0.10, so a 50-pip loss would take a quarter of that deposit.

Practise counting pips and pip values on a demo account until you can do it without a calculator. It is the most useful habit a beginner can build.