Forex pip
Family I · Instruments
Not to be confused with pip, pip forex, 1 pip in xauusd.
Forex pip is the standard unit for measuring price movement in a currency pair. For most pairs it equals 0.0001, while pairs quoted to two decimal places, including many JPY crosses, use 0.01. The pip is the basis for quoting spreads, calculating profit and loss, and expressing stop and target distances.
Pip value and position size
The monetary value of one pip depends on the trade size and the quote currency. For a standard lot of 100,000 units of the base currency, one pip is worth 10 units of the quote currency when the pair is quoted to four decimals. For a mini lot of 10,000 units, one pip is worth 1 unit of the quote currency; for a micro lot of 1,000 units, one pip is worth 0.10 units of the quote currency.
When the quote currency is not the account currency, the pip value is converted at the prevailing exchange rate. Brokers may also quote fractional pips, often called pipettes, which represent one tenth of a pip.
Worked example
Pairs quoted to two decimals
Currency pairs that include the Japanese yen are usually quoted to two decimal places, so one pip equals 0.01. For a standard lot of 100,000 units, one pip is worth 1,000 yen in the quote currency. The same position-size logic applies, but the pip increment is larger in absolute terms.
Often confused with
- pip
- A pip is the general unit of price increment across instruments, while a forex pip is that unit applied specifically to currency pairs; the visible sign is the pair quoted, such as EUR/USD rather than a stock or index.
- pip forex
- The phrase pip forex is an informal reversal of the standard term forex pip and carries the same meaning; the visible sign is the word order, with forex pip being the conventional form in reference material.
- 1 pip in xauusd
- One pip in XAU/USD refers to a 0.01 move in the gold price, whereas a forex pip for most currency pairs is 0.0001; the visible sign is the instrument, gold rather than a currency pair.