What Are Pips and Lots? Pip Value in Overseas FX With Examples
Unsure what pips and lots mean, and unable to calculate how much you would gain or lose?
In short, the value of 1 pip is found from lots x currency units x pip size. 1 lot is 100,000 units as standard.
This article gives worked examples for major instruments. By the end, you can estimate profit and loss and cashback on your own.
In short: the value of 1 pip is decided by lot size
- A pip is a unit for the size of a price move, close to the smallest price increment
- 1 lot is 100,000 units as standard. Mini is 10,000 units and micro is 1,000 units
- On USDJPY, a 1-pip move on 1 lot is about ¥1,000 in profit or loss
- Cashback is decided by lots, so understanding lots is the foundation
What are pips? Differences in decimal places by currency pair
A pip is a unit for measuring movement in an exchange rate. For most currency pairs, a 1 in the fourth decimal place equals 1 pip.
For pairs involving the yen, such as USDJPY, a 1 in the second decimal place is 1 pip. Remembering that the decimal place differs by pair helps you avoid calculation mistakes.
| Currency pair | Price move of 1 pip | Example rate display |
|---|---|---|
| USDJPY | 0.01 yen | 150.00 to 150.01 is 1 pip |
| EURUSD | 0.0001 dollars | 1.1000 to 1.1001 is 1 pip |
| GBPJPY | 0.01 yen | 190.00 to 190.01 is 1 pip |
| XAUUSD (gold) | Differs by broker | Check the broker's specifications for decimal handling |
What are lots? Units per lot
A lot is a unit of trade size. In overseas FX, it is standard to treat 1 lot as 100,000 units.
| Name | Units | Lot notation |
|---|---|---|
| Standard | 100,000 units | 1.00 lots |
| Mini | 10,000 units | 0.10 lots |
| Micro | 1,000 units | 0.01 lots |
On cent accounts and some CFD instruments, the size of 1 lot may differ. Check each broker's page for its specifications.
Formula for pip value and examples by instrument
Formula
Value of 1 pip = units (lots x 100,000) x size of 1 pip
If you trade 1 lot of USDJPY, multiplying 100,000 units by 0.01 yen gives ¥1,000. For EURUSD, multiplying 100,000 units by 0.0001 dollars gives 10 dollars.
| Instrument | Lots | Calculation | Value of 1 pip |
|---|---|---|---|
| USDJPY | 1 lot | 100,000 x 0.01 yen | ¥1,000 |
| USDJPY | 0.1 lots | 10,000 x 0.01 yen | ¥100 |
| EURUSD | 1 lot | 100,000 x 0.0001 dollars | 10 dollars |
| EURUSD | 0.1 lots | 10,000 x 0.0001 dollars | 1 dollar |
For gold, the quantity per lot differs by broker. For that reason, the value of 1 pip cannot be fixed uniformly. It is safer to check the broker's specifications with a calculator tool.
How cashback relates to lots
Cashback is calculated from the lots you trade, not from profit or loss. The formula is: cashback per lot x lots traded.
- Pips show the size of profit or loss; lots show trade size
- For the same price move, doubling the lots doubles the profit or loss
- Raising lots to increase cashback widens potential losses by the same ratio
- Cashback is a way of getting part of your trading cost back, not a guarantee of profit
Enter a currency pair and lots to estimate the value of 1 pip.
Calculate the value of 1 pipFAQ
Q.What are pips and lots?
Pips are a unit for the size of a price move, and lots are a unit of trade size. 1 lot is 100,000 units as standard, and the value of 1 pip grows in proportion to lots.
Q.How much is a 1-pip move on 1 lot?
About ¥1,000 for USDJPY and about 10 dollars for EURUSD. CFD instruments such as gold change with the broker's specifications, so check them.
Q.How many units is 0.01 lots?
If 1 lot is 100,000 units, 0.01 lots is 1,000 units. The definition may differ by account type or instrument, so check the broker's page.
Q.Does understanding pips and lots matter for cashback?
Yes. Cashback is decided by lots, so knowing your own trading volume is the starting point for estimating the amount you might receive.
This article is for information purposes only and is not investment advice. Conditions may change, so please check each broker's official page for the latest information. Offshore FX and CFD trading carries a risk of losses exceeding your principal.
