What is a pip?
A pip is the unit forex traders use to count price moves. Play with the price below, then try the quiz to check you have it.
1. Find the pip
1.11930
The highlighted digit is the pip. One pip is 0.0001. The faint digit after it is the pipette, a tenth of a pip, which many brokers show.
2. Move the price
At this size one pip is worth about $10.00 in a US dollar account. Shown with approximate exchange rates; the pip value calculator works it out for your own account.
3. Quick quiz
1. EUR/USD moves from 1.085 to 1.0872. How many pips is that?
2. USD/JPY moves from 150.2 to 150.75. How many pips is that?
3. GBP/USD moves from 1.265 to 1.2585. How many pips is that?
For information only, not financial advice. Trading carries a high risk of loss. Results depend on the values you enter and on your broker's contract specifications. Risk disclosure
The short answer
A pip is the smallest standard step in a forex price. On most currency pairs it is the fourth decimal place, 0.0001. If EUR/USD moves from 1.0850 to 1.0851, it has moved one pip. On pairs that include the Japanese yen, a pip is the second decimal place, 0.01, because yen prices have fewer decimals: USD/JPY moving from 150.00 to 150.01 is one pip.
Pips and pipettes
Most brokers show one more digit than the pip. That extra digit is a pipette, one tenth of a pip. A move from 1.08500 to 1.08510 is one pip, or ten pipettes. In the lesson above, the pip digit is the highlighted one and the pipette is the faint one after it.
How to count pips
- Subtract the two prices.
- Divide the difference by the pip size: 0.0001 for most pairs, 0.01 for yen pairs.
- EUR/USD from 1.0850 to 1.0872: the difference is 0.0022, and 0.0022 ÷ 0.0001 = 22 pips.
- USD/JPY from 150.20 to 150.75: the difference is 0.55, and 0.55 ÷ 0.01 = 55 pips.
- Gold is quoted differently by different brokers. Many treat 0.10 as one pip, others 0.01, so check your broker before you count.
From pips to money
A pip is only a distance. What it is worth depends on the size of your position. For a pair quoted in US dollars, such as EUR/USD, and a USD account, one pip is worth $10 on a standard lot (100,000 units), $1 on a mini lot (10,000 units) and $0.10 on a micro lot (1,000 units). For other pairs the value is worked out in the quote currency and converted to your account currency, so it changes a little as exchange rates move. The slider in the lesson shows the money for the lot size you pick.
Why traders count in pips
- It makes distances comparable. A 30 pip stop means the same distance on a chart whether the price is 1.08 or 150.
- It separates the idea from the size. You can plan a trade in pips (a 30 pip stop, a 60 pip target) and then choose how many lots to trade.
- It is the language of risk. Position size, risk/reward and stop-loss all start from a number of pips.
Where to go next
Use the pip value calculator to see what a pip is worth for your own pair, lot size and account currency. Then the position size calculator turns a stop in pips and the amount you are willing to lose into a lot size.
Frequently asked questions
+What does pip stand for?
Pip stands for percentage in point, or price interest point. In practice it just means the standard small step in a forex price.
+How many pips is a 0.0050 move in EUR/USD?
A pip on EUR/USD is 0.0001, so a move of 0.0050 is 50 pips.
+How many pips is a move from 150.20 to 150.75 in USD/JPY?
A pip on yen pairs is 0.01, so the move of 0.55 is 55 pips.
+Is a pip always worth the same amount of money?
No. Its value depends on the pair, the size of your position and your account currency. For one standard lot of a pair quoted in US dollars, in a USD account, it is $10.
+What is the difference between a pip and a point?
Brokers use the word point differently. On many platforms a point is the smallest price step shown, which is a pipette, one tenth of a pip. Check how your platform uses the word before you rely on it.