How much is a pip worth?

On a pair quoted in dollars such as EUR/USD, one pip is about 10 dollars on a standard lot, 1 dollar on a mini lot and 10 cents on a micro lot.

Blog / Beginner

Pips, Lots and Position Size: The Basics of Forex Math

What a pip is, how lot sizes work, how to calculate pip value and how to size a trade so that you risk a fixed amount on every position.

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, so EUR/USD moving from 1.1000 to 1.1001 is one pip. For pairs involving the Japanese yen it is the second decimal, 0.01.

Lot sizes

A standard lot is 100,000 units of the base currency, a mini lot is 10,000 and a micro lot is 1,000. On a pair quoted in dollars such as EUR/USD, one pip is worth about ten dollars on a standard lot, one dollar on a mini lot and ten cents on a micro lot.

Gold and other markets

Contract sizes differ by market and broker. For gold, one lot is commonly 100 ounces, so a one dollar move in the price is about 100 dollars per lot. Always check the contract size in your platform before trading.

Sizing a position from the stop

Decide how much you will risk, for example 1% of the account. Measure the distance from the entry to the stop in pips. Then position size equals the risk amount divided by the stop distance times the pip value. This keeps the risk the same whatever the stop distance is.

Example: a 10,000 account, 1% risk is 100 dollars. With a 25 pip stop on EUR/USD, 100 divided by 25 is 4 dollars per pip, which is about 0.4 of a standard lot.

Use a calculator

Doing this by hand invites mistakes. A position size calculator handles the pip value and the account currency for you. Use it before every trade until the habit is automatic.

One more thing

Keep a small table for the markets you trade: the pip size, the contract size and the pip value per lot in your account currency. Update it if you change broker, because contract sizes and the way profit is calculated can differ. A wrong pip value is one of the most common reasons beginners risk far more than they intended.

Key takeaways

A pip is usually 0.0001, or 0.01 for yen pairs.
A standard lot is 100,000 units.
Size the position from the stop distance.
Check the contract size for each market.

FAQ

How much is a pip worth? On a pair quoted in dollars such as EUR/USD, one pip is about 10 dollars on a standard lot, 1 dollar on a mini lot and 10 cents on a micro lot.

Educational content, not financial advice.