How Much Is a Forex Pip Worth?

What is a pip in forex?

A pip is the usual small step in a currency price. For EUR/USD, USD/CAD and most other pairs, one pip is 0.0001. For pairs with the Japanese yen, such as USD/JPY, one pip is 0.01.

Many platforms show one more digit. A move from 1.10000 to 1.10001 is a tenth of a pip, often called a pipette. So a pip is not always the smallest change you see on screen.

Traders count price moves in pips. "EUR/USD rose 25 pips" means it went up by 0.0025, for example from 1.1000 to 1.1025.

Metals and other products can follow different rules, so check the contract details for anything you trade. If pairs are new to you, read how to read currency pairs first.

How much is a pip worth on EUR/USD?

EUR/USD tells you how many US dollars one euro costs. So a change in the price is a number of dollars per euro. Multiply it by the number of euros you hold, and you get dollars.

Say you buy 10,000 euros at 1.1000 and sell them at 1.1025.

If the price falls 25 pips to 1.0975 instead, the change is minus 0.0025, and you lose $25. Keep the minus sign all the way through the sum. And if you had sold (gone short) instead of buying, the same rise would have cost you $25.

Here is a handy rule for any pair that ends in USD, such as EUR/USD, GBP/USD or AUD/USD. Every 10,000 units you hold makes each pip worth $1.

What are lots, and how do they change pip value?

Platforms count trade size in units or in lots. A standard lot is 100,000 units of the first currency. A mini lot is 10,000, and a micro lot is 1,000. Most forex brokers use the same sizes.

Check how your platform counts. On one app, typing 1 can mean one unit. On another, 1 can mean a whole standard lot, which is 100,000 times bigger.

Small sizes are useful while you learn. With a micro lot of 1,000 euros, a 20-pip move against you costs $2, not $200.

When you do the maths, write the size in full units. Round only the final money answer.

What if the US dollar is the first currency?

The money always comes out first in the pair's second currency, the quote currency. For EUR/USD that is US dollars, so with a US dollar account you are done. For USD/CAD it is Canadian dollars. For USD/JPY it is yen.

Say you buy 10,000 US dollars of USD/CAD. One pip is 0.0001 Canadian dollars per US dollar, so each pip is worth CAD 1. A 27-pip gain is CAD 27.

If your account is in US dollars, convert it. At USD/CAD 1.3500, divide: CAD 27 ÷ 1.35 = $20. A different rate gives a different answer, and your provider may charge for the conversion.

USD/JPY works the same way. One pip on 10,000 dollars is 100 yen. At 150 yen per dollar, that is about $0.67.

Is the pip result what you actually keep?

No. The sums above give the gross result, before costs. The spread, commission, overnight fees and currency conversion can all change what you keep.

Use the real prices you traded at: the ask when you bought and the bid when you sold. Then the spread is already inside your answer, so don't subtract it a second time.

In a fast market, your exit can also fill at a worse price than you planned. This is called slippage. A pip sum shows what a move is worth. It does not promise what you will get.

Can you work these out?

Try each one before you read the answer. All the numbers are made up, and costs are left out.

1. You buy 10,000 euros of EUR/USD, and it falls 12 pips. Answer: a $12 loss. One pip is 10,000 × 0.0001 = $1, and a fall hurts a buyer.
2. A USD/CAD trade gains CAD 54, and USD/CAD is 1.3500. What is that in US dollars? Answer: $40, because 54 ÷ 1.35 = 40.

Next lesson: what the spread costs you. After that, see how margin and leverage change the size of a trade, and how to plan risk and reward. Remember that a stop order cannot promise your loss limit, because prices can jump past it. When you compare providers, our forex broker guide uses this same 10,000-euro example to compare costs.