In forex, profits and losses are measured in pips — the smallest standard price move. This page explains what a pip is, how pip value is calculated, and why it decides your risk in dollars.
What is a pip?
A pip (percentage in point) is usually the fourth decimal place of a currency pair: for EUR/USD, a move from 1.1000 to 1.1001 is one pip. For JPY pairs it's the second decimal: USD/JPY 150.00 to 150.01 is one pip.
Why pip value matters
Your stop distance in pips is only meaningful once converted into your account currency. A 50-pip stop on one lot of EUR/USD risks $500; on 0.10 lots it's $50. Pip value links your trade plan to your risk budget.
How to calculate pip value
Adjust the result for smaller lots: a mini lot is 1/10 of a standard lot, a micro lot 1/100.
Worked example
1 standard lot, USD-quoted → pip value = $10
A 50-pip stop risks $500 per lot
Pip value per standard lot = 0.01 ÷ 150 × 100,000 ≈ $6.67
A 50-pip stop risks ≈ $333 per lot
Position sizing with pip value
Once you know your per-pip dollar value, sizing becomes: lots = money at risk ÷ (stop distance in pips × pip value per lot). This keeps your dollar risk constant across pairs.
Things to keep in mind
- Account currency. Pip value converts to your account currency; our calculator assumes USD.
- Exotic pairs and some crosses quote differently — check your broker's contract specs.
- 5-decimal quoting shows fractional pips; most trading platforms count 4th-decimal pips.