Key takeaways
- Pip value = pip size x units, expressed in the quote currency; convert it to your account currency when they differ.
- A standard lot is 100,000 units; mini and micro lots divide that by ten and one hundred.
- The value of a pip drifts with the exchange rate on pairs where the quote currency is not your account currency.
- Size from risk: money at risk divided by stop pips gives the pip value you can afford, then convert to lots and round down.
- Margin, spread and slippage sit on top of the arithmetic and are not captured by the pip formula.
Knowing that a trade moved 20 pips is only half the story. What matters is what those 20 pips are worth in your account currency, and that depends on lot size and on which pair you trade. This guide walks through the arithmetic one step at a time, with illustrative numbers you can replace with your own.
Lot sizes in plain numbers
A lot is a standard quantity of the base currency. One standard lot is 100,000 units. Brokers also offer smaller sizes so that traders can match exposure to a small account.
| Lot type | Units of base currency | Lots as shown on platform | EUR/USD pip value (USD) |
|---|---|---|---|
| Standard | 100,000 | 1.00 | 10.00 |
| Mini | 10,000 | 0.10 | 1.00 |
| Micro | 1,000 | 0.01 | 0.10 |
| Nano (some brokers) | 100 | 0.001 | 0.01 |
Always confirm the contract size in your broker's specification page. Some instruments, such as metals, indices and crypto CFDs, use different contract sizes, and the platform's lot field does not mean the same thing across them.
The core formula
Pip value is the pip size multiplied by the position size in units. The result is expressed in the quote currency, because the price itself is in the quote currency.
If your account is in the quote currency, you are done. If not, convert. The conversion rule is simple: you want the result in your account currency, so use the exchange rate that links the two.
Case 1: the quote currency is your account currency
Trading 0.30 lots of EUR/USD with a USD account. Units are 30,000. Pip value is 0.0001 x 30,000 = 3 USD. A 20-pip move is worth 60 USD, up or down.
Case 2: your account currency is the base currency
Trading USD/CHF with a USD account at a price of 0.9000 (illustrative), one standard lot. The pip is worth 0.0001 x 100,000 = 10 Swiss francs. To get dollars, divide by the USD/CHF price: 10 / 0.9000 = 11.11 USD per pip.
Case 3: a yen pair with a USD account
USD/JPY at 150.00, one standard lot. The pip is 1,000 yen. Divide by 150.00 to get dollars: 1,000 / 150.00 = 6.67 USD per pip. If USD/JPY falls to 140.00 the same pip is worth 7.14 USD, so the value of a pip drifts with the rate.
Case 4: a cross pair
EUR/GBP, one standard lot, with a USD account. The pip is 10 pounds. If GBP/USD is 1.2700, one pip is 10 x 1.2700 = 12.70 USD.
| Pair | Lot | Pip value in quote currency | Rate used | USD per pip (illustrative) |
|---|---|---|---|---|
| EUR/USD | 1.00 | 10 USD | None needed | 10.00 |
| USD/CHF | 1.00 | 10 CHF | USD/CHF 0.9000 | 11.11 |
| USD/JPY | 1.00 | 1,000 JPY | USD/JPY 150.00 | 6.67 |
| EUR/GBP | 1.00 | 10 GBP | GBP/USD 1.2700 | 12.70 |
Turning a risk amount into a position size
The most practical use of pip value is working backwards: you decide how much you are willing to lose, you know where your stop-loss would go, and the formula returns a lot size. Risk per trade divided by stop distance in pips gives the pip value you can afford, and that divided by the value of a pip per lot gives the lots.
Sizing a position from a risk limit
- Set the money at risk. Take your risk percentage times account equity. On a 5,000 USD account at 1% that is 50 USD.
- Measure the stop distance. Choose the stop from the chart or setup logic, not from the amount you want to risk. Say 25 pips on EUR/USD.Tip: Include the spread in the distance if your stop is on the opposite side of the quote.
- Compute the affordable pip value. 50 USD / 25 pips = 2.00 USD per pip.
- Convert to lots. EUR/USD pays 10 USD per pip per standard lot, so 2.00 / 10 = 0.20 lots.
- Round down. Platforms accept steps such as 0.01 lots. Always round down so the realised risk does not exceed your limit.
A second example on a yen pair: the same 50 USD risk and a 40-pip stop on USD/JPY at 150.00. The affordable pip value is 50 / 40 = 1.25 USD. One lot pays 6.67 USD per pip, so 1.25 / 6.67 = 0.187 lots, which rounds down to 0.18 lots. Check: 0.18 x 6.67 x 40 = about 48 USD at risk.
Common arithmetic slips
- Using the pip value of a different pair because the lot field looks the same.
- Forgetting that yen pairs have a two-decimal pip, which changes the pip size in the formula.
- Skipping the currency conversion and mixing quote-currency pounds, francs or yen with dollars.
- Rounding lots up instead of down.
- Ignoring that margin is a separate requirement: a position can pass a risk check yet still tie up a large share of your free margin.
Frequently asked questions
Is a pip always worth 10 dollars?
No. That figure holds for one standard lot of a pair quoted in dollars, such as EUR/USD. For other pairs it varies with the quote currency and the exchange rate.
What is a point or a pipette?
On five-digit platforms a point is a tenth of a pip. MetaTrader reports many stops and spreads in points, so a 25-pip stop may appear as 250 points.
Does my broker calculate pip value for me?
Most platforms show profit and loss in your account currency, and many have a built-in calculator. Doing it by hand once is still worth it, so you can sanity-check the numbers.
Why does the same stop in pips risk different amounts on different pairs?
Because the pip value per lot differs between pairs. 25 pips on EUR/USD and 25 pips on USD/JPY are different sums of money at the same lot size.