The Simple Definition
A pip ("percentage in point") is the smallest standard unit of price movement in a currency pair. For most pairs, that's the 4th decimal place — EURUSD moving from 1.0850 to 1.0851 is a 1-pip move. For pairs involving the Japanese yen, it's the 2nd decimal place instead, since JPY pairs are quoted differently — USDJPY moving from 149.50 to 149.51 is also 1 pip.
Some brokers quote an extra decimal ("pipettes" or fractional pips) for finer precision — 1.08505 instead of 1.0850 — but the pip itself, the 4th (or 2nd for JPY) decimal, is the standard unit everyone means when they talk about "20 pips" or "a 30-pip stop loss."
Why Pip Value Isn't Fixed
Here's the part that actually matters for risk management: a pip is not worth the same dollar amount in every situation. Pip value depends on three things — the pair you're trading, your position size (lot size), and your account's base currency.
- Lot size: A standard lot (100,000 units) moves roughly $10 per pip on most USD-quoted pairs. A mini lot (10,000 units) moves about $1 per pip. A micro lot (1,000 units) moves about $0.10 per pip.
- The pair: Pip value for XAUUSD (gold) or JPY pairs is calculated differently from a standard EURUSD-style pair — the formula changes based on which currency the pip is denominated in relative to your account currency.
- Account currency: If your account isn't in USD, every pip value needs converting at the current exchange rate, which drifts day to day.
The Formula
For a standard pair quoted against USD as the counter currency (like EURUSD), the formula is:
Example: EURUSD, 0.01 lots (1,000 units), pip size 0.0001
Pip value ≈ 0.0001 × 1,000 = $0.10 per pip
For pairs where USD is the base currency instead (like USDJPY), or for gold, silver, and crypto, the formula adjusts — which is exactly why manually calculating this for every pair gets tedious and error-prone fast.
Skip the Math
This is common enough friction that we built a free calculator into the site that does this instantly for any pair, lot size, and USD/NGN rate — no formula-juggling required before you size a trade.