A pip is the smallest standard move in a currency pair. Learn what one pip is worth, how lot size sets that value, and what a move costs you.<\/p>\n
A pip is the smallest standard step in a currency pair’s price. For most pairs it is the fourth decimal place, 0.0001.<\/p>\n
EUR\/USD moving from 1.0850 to 1.0851 is one pip. From 1.0850 to 1.0900 is fifty pips.<\/p>\n
Pairs involving the Japanese yen are the exception. They are quoted to two decimal places, so one pip is 0.01. USD\/JPY from 156.20 to 156.21 is one pip.<\/p>\n
Most platforms show one digit more than the pip: 1.08503 rather than 1.0850. That last digit is a fractional pip, often called a pipette, and it is one tenth of a pip. A price ticking from 1.08503 to 1.08507 has moved four pipettes, less than half a pip. Read that as four pips and every calculation after it is ten times too big.<\/p>\n
A pip is a distance, not an amount. What it is worth to you depends entirely on the size of your position.<\/p>\n
When the US dollar is the quote currency \u2014 the second one in the pair, as in EUR\/USD or GBP\/USD \u2014 the arithmetic is fixed and worth memorising:<\/p>\n
When the dollar is not the quote currency, the value of a pip in dollars shifts with the exchange rate, so it is not a figure you learn once. Your platform shows the value per pip in the order window. Check it before you confirm, not after.<\/p>\n
If you are unsure which currency sits on which side of a quote, how to read a forex quote<\/a> covers base, quote and spread.<\/p>\n A lot is the unit trade size is measured in. One standard lot of a currency pair is 100,000 units of the base currency, so 1.00 lot of EUR\/USD is a position on 100,000 euros.<\/p>\n Contract size is the number of units inside one lot, and it differs by instrument. Gold, quoted as XAU\/USD, is commonly 100 ounces per lot, so a $1 move in gold is worth roughly $100 on one lot. Indices such as the US 500 are priced per index point per contract, and are not measured in pips at all.<\/p>\n The numbers you learn on EUR\/USD do not carry across. Before trading an instrument for the first time, read its contract size, minimum volume and step size. Those are published for every instrument in the account specifications<\/a>.<\/p>\nWhat a lot is and why contract size matters<\/h2>\n
Micro, mini and standard lots compared<\/h2>\n
| Lot<\/th>\n | Volume you type<\/th>\n | Units of base currency<\/th>\n | One pip, USD-quoted pair<\/th>\n<\/tr>\n<\/thead>\n |
|---|---|---|---|
| Standard<\/td>\n | 1.00<\/td>\n | 100,000<\/td>\n | about $10<\/td>\n<\/tr>\n |
| Mini<\/td>\n | 0.10<\/td>\n | 10,000<\/td>\n | about $1<\/td>\n<\/tr>\n |
| Micro<\/td>\n | 0.01<\/td>\n | 1,000<\/td>\n | about $0.10<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Volume is the number you type into the order ticket, and the gap between 1.00 and 0.10 is a factor of ten on every pip that follows.<\/p>\n |