How to Calculate Pip Value (With Examples)

Step 1 of 4 in Forex Essentials.

A pip is the standard increment a currency pair moves in. Pip value is what one of those increments is worth to your account — and until you know it, you cannot size a forex trade, because the stop is measured in pips and the risk budget is measured in money.

Pip size comes first

For almost every pair, one pip is 0.0001 — the fourth decimal place. If EUR/USD moves from 1.0850 to 1.0851, that is one pip.

The exception is JPY-quoted pairs, where one pip is 0.01, the second decimal place. USD/JPY moving from 150.25 to 150.26 is one pip.

Most brokers quote a fifth decimal (or third for JPY). That final digit is a pipette, one tenth of a pip: a move from 1.08500 to 1.08505 is half a pip.

The formula

Pip value (quote currency) = pip size × units traded

Pip value (account currency) = pip value in quote × quote-to-account rate

The quote currency is the second one in the pair — the USD in EUR/USD, the JPY in USD/JPY. Pip value is always denominated in the quote currency first, then converted into whatever your account is held in.

Example 1: EUR/USD, one standard lot, USD account

Pip size 0.0001, one standard lot is 100,000 units:

0.0001 × 100,000 = $10 per pip

The quote currency is already USD, so the conversion rate is 1 and the pip value is $10.00. This is the number people memorise — and it holds for every USD-quoted pair: GBP/USD, AUD/USD, NZD/USD are all $10 per pip per standard lot.

Example 2: USD/JPY, one standard lot, USD account

Pip size 0.01, still 100,000 units:

0.01 × 100,000 = ¥1,000 per pip

Now the conversion matters. With USD/JPY trading at 150.00, one yen is worth 1 ÷ 150 = $0.006667:

¥1,000 × 0.006667 = $6.67 per pip

Two things follow. First, JPY pairs are worth noticeably less per pip than USD-quoted pairs — a 50-pip stop on USD/JPY risks $333, not $500. Second, the pip value moves with the exchange rate. If USD/JPY rallies to 160, the pip value falls to $6.25.

Example 3: GBP/JPY, one standard lot, USD account

The base currency is irrelevant to pip value; only the quote matters. GBP/JPY is JPY-quoted, so it behaves exactly like USD/JPY:

0.01 × 100,000 = ¥1,000 → $6.67 per pip at USD/JPY 150

Note the conversion uses USD/JPY, not GBP/JPY — you are converting yen into dollars, and the pair that prices that is USD/JPY.

Pip value by lot size

Pip value scales linearly with units, so any size in between is a simple proportion: 37,000 units of EUR/USD is $3.70 per pip.

Where it goes wrong

Using the pair's own rate to convert. For GBP/JPY you convert yen to dollars with USD/JPY. Reaching for the GBP/JPY rate is the single most common error and produces a number roughly double the right one.

Assuming $10 per pip everywhere. It is correct only for USD-quoted pairs with a USD account, at standard lot size. Cross pairs and non-USD accounts both break it.

Forgetting the value drifts. For any pair where the quote currency is not your account currency, pip value changes as the market moves. For a day trade this is noise; on a position held for weeks it is not.

Confusing pips with pipettes. A "12.5 pip spread" that is really 12.5 pipettes is 1.25 pips. Check which decimal your platform is showing.

Turning pip value into a position size

Pip value is the input to sizing, not the output. Once you have it:

Units = risk amount ÷ (stop in pips × pip value per unit)

A $5,000 account risking 1% has $50 to lose. On EUR/USD with a 40-pip stop, one unit is worth $0.0001 per pip, so 40 pips risks $0.004 per unit:

$50 ÷ $0.004 = 12,500 units = 0.125 standard lots