Formula
| Item | Expression |
|---|---|
| Yen crosses (such as USD/JPY) | 1 pip = 0.01 yen × 100,000 units × lots = 1,000 yen × lots |
| USD pairs (such as EUR/USD) | 1 pip = 0.0001 USD × 100,000 units × lots = 10 USD × lots (multiply by USD/JPY for the yen value) |
| Gold (XAU/USD) | 1 pip = 0.1 USD × 100 ounces × lots = 10 USD × lots |
The size of 1 lot and the pip digit differ by broker.
How much is 1 pip? The basic idea
A pip is the smallest unit of an exchange rate: the 2nd decimal place (0.01 yen) for yen crosses and the 4th (0.0001 dollars) for USD pairs. The profit or loss per pip is determined by price move × trading size.
1 lot = 100,000 units is the standard, so trading 1 lot of USD/JPY moves 1,000 yen per pip. At 0.1 lot it is 100 yen, and at 0.01 lot it is 10 yen.
Turning stop-loss and take-profit distances into amounts
Even if you decide to "stop out at 20 pips", the amount is completely different depending on your lot size: 20,000 yen at 1 lot, 2,000 yen at 0.1 lot. Checking the amount before you enter is the basis of money management.
- Pips and points are different. On most MT4 and MT5 platforms, 10 points = 1 pip
- For gold, some brokers treat 0.1 dollars as 1 pip and others treat 1 dollar as 1 pip
- If your account currency is USD, the profit or loss on yen crosses is converted at the exchange rate
Points to note
The tool's values are approximate. Actual profit and loss also include spread, commission and swap. Check the contract size for each instrument in your broker's instrument specifications.