If you’re new to forex, you’ll hear the word “pip” all the time. It’s simply the way traders measure how far a price has moved — and once you understand it, working out profits, losses and position sizes becomes easy.
The quick answer
A pip (“percentage in point”) is the standard unit of price movement in a currency pair.
- For most pairs, like EUR/USD, a pip is the fourth decimal place: 0.0001.
- For pairs involving the Japanese yen, like USD/JPY, a pip is the second decimal place: 0.01.
Example: if EUR/USD moves from 1.0850 to 1.0870, it has moved 20 pips.
What’s a pipette?
Many brokers quote prices to one extra decimal place. That last digit is a pipette, or a tenth of a pip. So if EUR/USD is quoted at 1.08505, the final “5” is half a pip.
How much is a pip worth?
The value of a pip depends on your trade size and the currency pair.
For pairs where the US dollar is the second currency (EUR/USD, GBP/USD, AUD/USD), it’s simple:
| Trade size | Units | Value of 1 pip |
|---|---|---|
| 1 standard lot | 100,000 | $10 |
| 0.10 lot (mini) | 10,000 | $1 |
| 0.01 lot (micro) | 1,000 | $0.10 |
Example: you buy 0.10 lot of EUR/USD and the price rises 30 pips. Your gain is 30 × $1 = $30. If it falls 30 pips, your loss is $30.
For other pairs the value changes with the exchange rate. With USD/JPY, for example, one pip on a standard lot is 1,000 yen, so its dollar value depends on the USD/JPY price.
Pips in gold
Gold (XAU/USD) is usually traded in lots of 100 ounces, but brokers define a gold “pip” differently — commonly $0.01 or $0.10. The simplest way to think about it: on 1 standard lot, every $1 move in the gold price is worth $100; on 0.01 lot, it’s worth $1.
Why pips matter
Pips are how you:
- Measure your stop-loss — e.g. “my stop is 25 pips away”
- Work out your position size — so a stop-loss only costs what you planned
- Compare costs — spreads are quoted in pips (e.g. “1.2 pips on EUR/USD”)
Try it yourself
Use our free pip value calculator to see what a pip is worth for different markets and trade sizes, and the position-size calculator to turn your risk and stop-loss into a lot size.
Frequently asked questions
How many pips is a good trade?
There’s no fixed number — it depends on the market, the time frame and your plan. What matters most is that your potential reward makes sense compared with the risk you’re taking.
Is a pip the same as a point?
Not always. Some platforms use “point” to mean the smallest price increment (a pipette). Check how your broker displays prices.
Next step: Learn lots, pips and position sizing in Lesson 8 of our free course — or try the calculators.
Capital at risk. This article is general education, not investment advice.