What Is a Pip in Forex?

If you have read anything about forex trading, you have seen the word pip. It is the standard way traders describe how far a price moved — not in dollars, not in percent, but in pips. This page explains what a pip is, how it is counted on different pairs, and how to turn pips into money.

The definition

A pip ("percentage in point") is the smallest conventional price increment of a currency pair. For most pairs, prices are quoted to four decimal places, and one pip is the fourth decimal — 0.0001.

If EUR/USD moves from 1.0800 to 1.0810, it rose by 10 pips. If it falls to 1.0755, that is a drop of 45 pips.

JPY pairs count differently

Japanese-yen pairs are quoted to only two or three decimals, and there one pip is the second decimal — 0.01.

USD/JPY moving from 147.50 to 147.52 has moved 2 pips. The rule to remember: a pip is almost always the fourth decimal, except for JPY-quoted pairs, where it is the second.

What about gold?

Gold (XAU/USD) is not a currency pair, but brokers quote pip moves for it too. Convention varies — on many platforms one pip for gold is 0.01 (one cent of price movement), which is what YenPip assumes. Some brokers count differently, so it is worth checking before you place a stop loss measured in pips.

From pips to money: pip value

Pips describe distance. What you actually gain or lose is money, and that depends on three things: the pair, your position size, and your account currency.

For a standard lot (100,000 units of the base currency):

• On EUR/USD, one pip is 100,000 × 0.0001 = $10 per pip, in USD.
• On USD/JPY, one pip is 100,000 × 0.01 = 1,000 JPY per pip. If your account is in USD, that is divided by the USD/JPY rate — at 147.50 it is roughly $6.78 per pip.

That second case is the one that surprises people: the pip value of JPY pairs floats with the exchange rate itself.

Mini (0.1 lot) and micro (0.01 lot) positions scale this down by ten and a hundred, so a micro lot on EUR/USD is worth $0.10 per pip.

Why it matters for risk

Everything in position sizing starts from pip value. If you know your stop loss in pips and the pip value in your account currency, you can work out exactly how much a losing trade will cost — and size the position so that number stays within your risk limit.

You do not need to do this by hand. The pip value calculator converts any pair, lot size, and account currency instantly, and the lot size calculator works backwards from a risk percentage to a position size.

YenPip calculators are estimation tools, not financial advice. Actual results differ by broker conditions such as spread, commission, and swap.