Pip value in your account currency
Lesson 3 of 4 · about 9 minutes
2 questions, each checked the moment you answer it.
6 steps · about 9 minutes
The interactive lesson walks these ideas one screen at a time and checks your answers as you go. The text below covers the same ground for reading.
A pip is the standard unit of a price move
For most pairs that is a change of 0.0001 in the quoted price: EUR/USD moving from 1.0865 to 1.0866 has moved one pip. The example trade's spread was 0.9 of a pip, and every stop and every risk in this course is measured the same way. Knowing what a pip is worth in money is what turns a price move into an amount you can size a trade against.
The same pip can be worth different amounts
A lot is the quantity of a trade: one standard lot is 100,000 units of the base currency, so one standard lot of EUR/USD is 100,000 euro, while one lot of gold is 100 ounces. What a pip is worth then depends on four things: how big a pip is on that pair, how many lots you hold, which currency the pair is quoted in, and the rate that converts that currency into the one your account is held in.
On EUR/USD, one pip on one lot is worth US$10.00
For a one-pip move, each euro in the position changes in value by US$0.0001, and one standard lot holds 100,000 euros, so the whole position changes by US$10.00 a pip. EUR/USD is quoted in US dollars, so that amount is already in the currency a dollar account holds and there is nothing to convert.
Sometimes the pair is quoted in a currency you do not hold
USD/JPY is quoted in yen, and a yen pip is 0.01. One pip on one standard lot is 0.01 × 100,000, which is 1,000 yen. Your account holds dollars, not yen, so the platform divides by the USD/JPY rate: 1,000 ÷ 157.20 is about US$6.36. Move the rate and the pip price moves with it.