A pip (percentage in point or price interest point) is the smallest price movement in the Forex market.

Most currency pairs are quoted to four decimal places (e.g., EUR/USD: 1.1234), while pairs involving the Japanese yen (JPY) are quoted to two decimal places (e.g., USD/JPY: 144.56). Some brokers use five and three decimal places for more precision.

Standard Pip Value by asset type

🔹Forex Currency Pairs → 1 pip = 0.0001 (for most pairs) or 0.01 (for JPY pairs)
🔹Indices → 1 pip = 1.0 index point
🔹Metals → 1 pip = 0.01 (e.g., XAU/USD)
🔹Other Instruments → 1 pip = equal to the tick size

Formula for Calculating 1 Pip Value

1 Pip Value= Volume * Contract Size * Tick Size

Important: The pip value is always calculated in the quote currency of the trading pair. To obtain the pip value in your account's base currency, you must convert it using the current exchange rate.

Example:

Scenario: AUD/CAD Trade (1 Lot) with USD Account

🔹Trading Pair: AUD/CAD
🔹Account Currency: USD
🔹Volume: 1 Lot (100,000 units)
🔹Pip Value in CAD: 10 CAD
🔹Conversion Rate (USD/CAD): 1.44577
     10 CAD ÷ 1.44577 = 6.92 USD

Thus, for 1 pip movement, the trader gains or loses $6.92 USD.

Why is Pip Calculation important?

🔹Helps determine risk management and position sizing
🔹Affects profit/loss calculations in trading
🔹Ensures accurate lot size selection

Eurotrader’s advantage: competitive pip pricing

At Eurotrader, we strive to offer the smallest pip values possible. Thanks to our strong relationships with top liquidity providers, we are able to access better pricing and tighter spreads, giving our traders an edge in the market.

Need more details? Our support team is always here to help.

Open an account with Eurotrader today!