Pip Value Calculator Guide: Calculate Risk Accurately

Understanding Pip Values

A pip (percentage in point) is the smallest price movement in forex trading. Most currency pairs move in increments of 0.0001 (one pip), though JPY pairs move in 0.01 increments. Understanding pip values is essential for calculating position size and managing risk properly.

What is a Pip?

For most currency pairs like EUR/USD:

One pip = 0.0001 price movement
From 1.2500 to 1.2501 = 1 pip move
From 1.2500 to 1.2510 = 10 pips move

For JPY pairs like USD/JPY:

One pip = 0.01 price movement
From 150.00 to 150.01 = 1 pip move
From 150.00 to 150.10 = 10 pips move

How to Calculate Pip Value

Pip value depends on your lot size and the currency pair. The basic formula:

Pip Value = (1 pip / Exchange Rate) × Lot Size × 100,000

For EUR/USD at 1.2500 with 1 standard lot (100,000 units):

Pip Value = (0.0001 / 1.2500) × 100,000 × 1 = $8 per pip
A 10 pip move = $80 profit or loss
A 100 pip move = $800 profit or loss

Lot Sizes and Pip Values

Different lot sizes produce different pip values:

Micro Lot (0.01): $0.08 per pip (1% of standard lot)
Mini Lot (0.1): $0.80 per pip (10% of standard lot)
Standard Lot (1.0): $8 per pip (100% standard)
Mega Lot (10.0): $80 per pip (10x standard)

Calculating Position Size Based on Risk

Professional traders determine position size FIRST based on their account risk, then calculate pip values. Here's how:

Determine your account size ($10,000 for example)
Decide risk per trade (typically 1-2% = $100-$200)
Determine your stop loss distance (50 pips for example)
Calculate lot size: Risk / (Stop Loss in Pips × Pip Value per Lot)
Example: $100 / (50 × $8) = 0.25 lots = 25,000 units

Pip Values for Different Currency Pairs

Pip values vary significantly by pair:

Major Pairs (EUR/USD, GBP/USD): $8-10 per pip (1 standard lot)

JPY Pairs (USD/JPY, EUR/JPY): $10 per pip (1 standard lot) - due to smaller pip value

Commodity Pairs (USD/CAD): $8 per pip (1 standard lot)

Exotic Pairs: Varies widely - always calculate before trading

Using Pip Calculators for Accuracy

Our Pip Calculator tool automates these calculations:

Enter currency pair (EUR/USD, GBP/USD, etc.)
Enter lot size (0.01 to 10.0)
Enter current exchange rate
Instantly see pip value in your account currency
Calculate position size based on account risk

Real-World Pip Value Example

You trade GBP/USD at 1.2700 with a 0.5 standard lot position. Your pip value is: (0.0001 / 1.2700) × 50,000 × 1 = $3.94 per pip. If price moves against you by 30 pips, your loss is approximately $118. If price moves in your favor by 80 pips, your profit is approximately $315.

FAQ

Q: Does pip value change with exchange rate?

A: Yes, slightly. As exchange rates move, the pip value changes. This is why recalculating occasionally is good practice.

Q: Why is JPY different?

A: The Japanese Yen is typically quoted to 2 decimal places instead of 4, making one pip worth 0.01 instead of 0.0001.

← Back to Blog Use Pip Calculator →