What is a Pip?
A pip (Percentage in Point) is the smallest standardized unit of price movement in a forex currency pair. It is the foundation of profit and loss calculation.
Pip value changes based on the currency pair's price format:
Standard Format (4 Decimal Places)
For EUR/USD, GBP/USD, AUD/USD and similar pairs:
- 1 pip = 0.0001
- Example: EUR/USD moves from 1.0850 to 1.0851 = 1 pip increase
JPY Pairs (2 Decimal Places)
For USD/JPY, EUR/JPY, GBP/JPY and similar:
- 1 pip = 0.01
- Example: USD/JPY moves from 110.25 to 110.26 = 1 pip increase
Key Point: The pip is the basic unit for calculating profit and loss in forex. You cannot trade forex without understanding pip values.
What is a Pipette?
A pipette (Fractional Pip) is one-tenth of a pip. Some brokers display 5 decimal places, using pipettes for precision:
5-Decimal Format (EUR/USD example)
- Bid: 1.08500
- Ask: 1.08520
- Spread: 2 pips = 20 pipettes
Pipettes allow more precise price display and are especially important for scalpers.
Pip Calculation
Standard Pairs (4 Decimal)
Pip Value = (0.0001 / Exchange Rate) × Lot Size
For USD-quoted pairs (EUR/USD, GBP/USD):
- Pip value is directly in USD = $10 per pip (standard lot)
JPY Pairs (2 Decimal)
Pip Value = (0.01 / Exchange Rate) × Lot Size
Example: USD/JPY at 150.00 → Pip value ≈ $6.67 per pip (standard lot)
Pip Value by Lot Size
| Lot Type | Lot Size | EUR/USD pip value |
|---|---|---|
| Standard (1.0) | 100,000 units | $10 |
| Mini (0.1) | 10,000 units | $1 |
| Micro (0.01) | 1,000 units | $0.10 |
Use our Pip Value Calculator to calculate exact pip values for any pair.
Pip Value by Currency Pair
| Pair | Pip Size | 1 Pip (Standard Lot) |
|---|---|---|
| EUR/USD | 0.0001 | $10 |
| GBP/USD | 0.0001 | $10 |
| USD/JPY | 0.01 | ~$6.70 |
| USD/CHF | 0.0001 | ~$11 |
| XAU/USD (Gold) | 0.01 | $1 |
Practical Examples
Example 1 — EUR/USD profit
- Buy at 1.0850, close at 1.0920
- Profit: 70 pips
- With 0.1 lot: 70 × $1 = $70 profit
Example 2 — USD/JPY loss
- Buy at 150.00, close at 149.70
- Loss: 30 pips
- With 0.01 lot: 30 × $0.067 = $2.01 loss
FAQ
Why is the pip 0.0001 and not 0.001? The 4-decimal standard was adopted to provide more precise pricing in currency markets. It reflects the smallest meaningful price change in interbank forex trading.
Does pip value change? Yes. For pairs where USD is not the quote currency (e.g., EUR/GBP), pip value fluctuates with exchange rates. Use a pip calculator for accuracy.