What is a pip and how do you calculate its value?

A pip (percentage in point) is the standard unit in which forex price moves and spreads are expressed. If you know the value of a pip, you know exactly what a price move means in euros.

How big is a pip?

• For most currency pairs a pip is 0.0001: the fourth decimal. If EUR/USD rises from 1.0850 to 1.0851, that is one pip.
• For pairs with the Japanese yen a pip is 0.01: the second decimal.
• Many brokers show an extra decimal, the pipette (a tenth of a pip).

The formula

Pip value = pip size × position size (in units)

The result is in the quote currency (the second currency of the pair). If your account is in euros, you then convert it to euros.

Example: EUR/USD

A standard lot is 100,000 units.

• 0.0001 × 100,000 = 10 dollars per pip
• At a rate of 1.0850 that is 10 / 1.0850 = €9.22 per pip

Position size	Units	Pip value EUR/USD
Standard lot (1.00)	100,000	$10.00
Mini lot (0.10)	10,000	$1.00
Micro lot (0.01)	1,000	$0.10

Example: USD/JPY

• 0.01 × 100,000 = 1,000 yen per pip
• At a rate of 150.00 that is 1,000 / 150 = $6.67 per pip, which you then convert to euros.

Why this matters

Spreads are quoted in pips. A spread of 1.0 pip on one standard lot of EUR/USD therefore costs you about €9.22 before the price has even moved. That's how you compare broker costs fairly.

Work it out yourself with our pip calculator.