What Is a Pip in Forex? Pips, Lots and Pip Value Explained

What you'll learn

• What a pip is and where to find it on a normal quote and on a yen quote.
• The difference between a pip, a point and a tick on your platform.
• How to calculate what one pip is worth for any position size.
• How pips turn the spread into a cost in money.

What is a pip in forex?

A pip in forex is the standard unit for measuring a change in a currency pair's price: 0.0001 (the fourth decimal) on most pairs such as EURUSD, and 0.01 on yen pairs such as USDJPY. The US CFTC defines a pip as the smallest price unit of a commodity or currency (CFTC glossary).

The name is often expanded as "percentage in point". Yen pairs are different because one yen is worth far less than one dollar. USDJPY is quoted as a number in the hundreds, such as 150.00, so it needs fewer decimal places, and the pip sits on the second decimal.

To count pips between two prices, subtract one from the other and divide by the pip size. From 1.1000 to 1.1050 is 0.0050 ÷ 0.0001 = 50 pips.

A pip on its own says only how far price moved. It says nothing about money. "It moved 20 pips" can be $2 or $200, depending on how much you traded.

Think of buying fabric. The price per metre is the pip; how many metres you buy is the lot. Your bill depends on both.

What is the difference between a pip and a point?

A point, also called a pipette, is one step of the last decimal your platform shows, and it is one tenth of a pip: ten points make one pip. If EURUSD is shown as 1.10005 and USDJPY as 150.005, the final digit is a point.

The Digits field in a symbol's specification in MetaTrader 5 tells you how many decimals that symbol is quoted to. Mixing the two up is a common beginner mistake. A distance of 200 points on a five-digit quote is 20 pips, not 200.

You will also see the word tick. The CFTC defines a tick as a minimum change in price up or down (CFTC glossary). In MetaTrader 5, each symbol's specification lists its tick size and tick value (MetaTrader 5 help).

1. On EURUSD at 1.10005, the pip is the fourth decimal place.
2. On USDJPY at 150.005, the pip is the second decimal place, in the same position on screen.
3. The smaller final digit on each quote is a point, one tenth of a pip.

How do lots relate to pips?

A lot is the unit of position size and a pip is the unit of price movement, so you need both to turn a price move into money: the lot tells you how many units of currency you hold, and the pip tells you how far the price of each unit moved.

The examples in this lesson use the usual forex contract size, where one standard lot (1.00) is 100,000 units of the first currency in the pair, a mini lot (0.10) is 10,000 units and a micro lot (0.01) is 1,000 units. Your platform's real figure is the Contract size field in the symbol specification, which MetaTrader 5 describes as the number of units in one lot (MetaTrader 5 help). Contract sizes differ between instruments, so check it rather than assuming 100,000. Choosing lot sizes is covered in our guide to forex lot sizes.

How do you calculate pip value?

Pip value is what one pip is worth in money on your position: number of lots × contract size × pip size, in the pair's second currency. For 1 lot of EURUSD that is 1 × 100,000 × 0.0001 = $10 per pip. In another account currency, the platform converts it at the current rate.

For pairs quoted in US dollars, such as EURUSD, the answer is already in dollars:

For a yen pair the answer comes out in yen, so it has to be converted. On 1 lot of USDJPY: 1 × 100,000 × 0.01 = ¥1,000 per pip. With USDJPY at 150.00, that is ¥1,000 ÷ 150 = about $6.67 per pip. Because the conversion uses the current price, the dollar value of a yen-pair pip changes a little as the rate moves. This is why a pip is not worth $10 a lot on every pair.

The pip value calculator does this arithmetic for any pair and position size.

What is a 20-pip move worth in money?

A 20-pip move is worth 20 times your pip value, so on 0.10 lot of EURUSD, where each pip is worth $1, it is a $20 profit or a $20 loss depending on the direction, and on 1.00 lot the same move is $200 either way.

• Price moves 20 pips in your favour: 20 × $1 = $20 profit.
• Price moves 20 pips against you: 20 × $1 = $20 loss.
• Trade 1.00 lot instead and each pip is worth $10, so the same 20 pips is $200, in whichever direction it goes.

MT5 converts the result into your account currency at the live rate. The pip count stays the same; only the currency it is shown in changes, and the local figure moves whenever the exchange rate moves.

How do pips relate to the spread?

The spread, the gap between the buy (ask) and sell (bid) price, is measured in pips, so its cost in money is the spread in pips × your pip value: a 2-pip spread on 0.10 lot of EURUSD, where a pip is worth $1, costs $2 when you open the trade.

Because you pay the spread up front, a new position starts slightly negative, and the price has to move by the spread in your favour before the trade is back to zero. Spreads, commission and overnight swap are covered in the spread, commission and swap lesson.

Why convert pips into money before you trade?

Converting pips into money shows what a trade really puts at stake: a 20-pip stop sounds small, but its cost depends on position size, so skilled traders work out the money value of the stop before they open a trade, knowing that losses grow with size exactly as gains do.

• Gaps. Prices can jump past a level without trading at it, for example after news or over a weekend, so a stop can fill some pips beyond its level.
• Different instruments. Metals, indices and other CFDs use their own price steps and contract sizes, so a "pip" on one symbol may not mean the same as on another.
• Leverage. Leverage, covered in the leverage and margin lesson, lets you open a position far larger than your deposit, so measure each pip's value against your whole account, not the margin.

For how pips and trading costs fit together, see the rest of the CFDs Explained module.

How do you check pip size and pip value in MetaTrader 5?

In MetaTrader 5, select a symbol such as EURUSD in Market Watch, right-click and choose Specification: Digits shows how many decimals the price has, Contract size shows the units in one lot, and Tick size and Tick value show the smallest price step and its money value (MetaTrader 5 help).

Try it on a demo account:

1. Open the specification for EURUSD and note the contract size and the digits.
2. Open a chart and use the crosshair to measure between two prices. On the MetaTrader 5 mobile app, the crosshair shows the vertical distance in points (MetaTrader 5 Android help).
3. Divide the points by ten to get pips on a five-digit quote.
4. Work out the pip value for 0.01 lot and check it against the pip value calculator.

Contract sizes and quote digits differ between accounts and symbols, and the specification is the reference for each one.

How much is 1 pip worth?

It depends on your position size and the pair. On EURUSD, one pip is worth $10 on 1 standard lot, $1 on 0.10 lot and $0.10 on 0.01 lot. On pairs not quoted in US dollars, such as USDJPY, the value is converted at the current rate, so it is not exactly $10 a lot.

What does pip stand for?

Pip is usually expanded as "percentage in point", and some sources say "price interest point". Either way, in forex it means the standard unit of price movement: 0.0001 on most pairs and 0.01 on yen pairs.

How do you calculate pips between two prices?

Subtract the lower price from the higher one and divide by the pip size. A move from 1.1000 to 1.1050 on EURUSD is 0.0050 ÷ 0.0001 = 50 pips; a move from 150.00 to 150.50 on USDJPY is 0.50 ÷ 0.01 = 50 pips.

What is a pipette?

A pipette is another name for a point, the extra fifth decimal on most pairs or third decimal on yen pairs. It is one tenth of a pip, so ten pipettes make one pip.

Are pips used for gold, indices, stocks or crypto?

Not in the same standard way. Gold, indices, stock CFDs and crypto CFDs move in their own price steps and have their own contract sizes, so check the symbol's tick size and contract size on your platform before working out what a move is worth.

• US Commodity Futures Trading Commission (CFTC), CFTC Glossary (accessed 27 October 2026): definitions of a pip as the smallest price unit of a commodity or currency, and of a tick as a minimum change in price. https://www.cftc.gov/LearnAndProtect/AdvisoriesAndArticles/CFTCGlossary/index.htm
• MetaQuotes, MetaTrader 5 Help: Market Watch (accessed 27 October 2026): the symbol specification window and its contract size, digits, tick size and tick value fields. https://www.metatrader5.com/en/terminal/help/trading/market_watch
• MetaQuotes, MetaTrader 5 for Android Help: Chart (accessed 27 October 2026): the crosshair's distance readout in points. https://www.metatrader5.com/en/mobile-trading/android/help/chart