What is a pip, and how is pip value calculated?
Quick answer
A pip is the standard small price increment in forex: 0.0001 for most currency pairs and 0.01 for pairs quoted in Japanese yen. Pip value is how much money one pip is worth for a given position size. For a standard lot on a pair quoted in US dollars, one pip is worth $10.
Detailed answer
Pips give traders a common language for price movements regardless of the exchange rate.
Pip sizes
- Most pairs: 1 pip = 0.0001. EUR/USD moving from 1.08500 to 1.08600 is 10 pips.
- JPY pairs: 1 pip = 0.01. USD/JPY moving from 150.20 to 150.50 is 30 pips.
- Fractional pips: many platforms quote one more decimal, so the last digit is a tenth of a pip.
Pip value
Pip value = pip size × contract size × lots, converted into the account currency.
- EUR/USD, 1 lot: 0.0001 × 100,000 = $10 per pip.
- USD/JPY, 1 lot: 0.01 × 100,000 = ¥1,000 per pip, about $6.67 at 150.00.
- EUR/GBP, 1 lot: £10 per pip, converted at the GBP/USD rate.
Why traders care in a challenge
Pip value converts a stop distance into money, which is how traders keep each trade within the daily loss limit. A trader with a $5,000 daily limit and $10 pips on 1 lot can absorb 500 pips across all trades that day before breaching.
PropExecutor converts every instrument's profit and loss into the account currency at live rates, so the equity and headroom figures a trader sees already reflect the true pip value of their positions.
PropExecutor team · Updated
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