How to Calculate Pips in Forex: Complete 2025 Guide + Examples

Understanding how to calculate pips in forex is not optional. It forms the foundation of risk management, profit targeting, and trading success.

　　Getting this wrong can quickly drain your trading account. The basic idea of calculating pips is finding the difference between two prices. But the real value depends on your currency pair and position size.

　　For most pairs, a pip is the fourth decimal place (0.0001). This guide will explain everything you need to know. We'll cover what a pip is, provide formulas for all pairs, show how to convert pips to money, and walk through a complete trade example.

　　

The Foundation: What is a Pip？

　　Before we can calculate anything, we need to understand what we're measuring. A pip is the basic unit of change in forex trading.

　　

Defining "Percentage in Point"

　　Pip stands for "Percentage in Point" or "Price Interest Point." It's the smallest standard amount a currency pair's price can move.

　　Think of a pip like a "cent" for a dollar or a "tick" for a stock. This unit helps us measure price movements in a standard way across different currency pairs.

　　

Pip vs. Pipette

　　You'll often see forex quotes with five decimal places instead of four. The extra digit is called a pipette or fractional pip.

　　Brokers added pipettes to give traders more exact pricing. A pipette equals one-tenth of a standard pip.

　　Here's a simple example:

• EUR/USD Price: 1.07358
• The '5' is the pip
• The '8' is the pipette

　　For our calculations, we'll focus on the standard pip, which is the fourth decimal place for most currency pairs.

　　

The Japanese Yen Case

　　There's one big exception to the four-decimal rule: pairs with the Japanese Yen (JPY).

　　Since the yen has a much lower value than other major currencies, the pip is the second decimal place (0.01) for any JPY pair, like USD/JPY or EUR/JPY. The third decimal place is the pipette.

　　

The Core Formulas: Step-by-Step

　　Calculating pip movement between two prices is a simple subtraction problem. You just need to know which decimal place to look at for different currency pairs.

　　

The Universal Principle

　　The basic formula for pip movement is always the same. You find the difference between your exit price and entry price.

　　Pip Movement = |Exit Price - Entry Price|

　　After finding this difference, you convert it to a pip count based on the pair's specific rule.

　　

Direct Currency Pairs

　　Direct pairs have the U.S. Dollar (USD) as the second currency. Examples include EUR/USD, GBP/USD, and AUD/USD.

　　For these pairs, the pip is the fourth decimal place (0.0001).

　　Let's use an example. Say you buy EUR/USD at 1.0720 and sell at 1.0750.

• Calculation: 1.0750 - 1.0720 = 0.0030
• Result: You made a 30-pip gain

　　If the price had dropped to 1.0700, your calculation would be |1.0700 - 1.0720| = 0.0020, which means a 20-pip loss.

　　

Indirect Currency Pairs

　　Indirect pairs have the U.S. Dollar (USD) as the first currency. Examples include USD/JPY, USD/CHF, and USD/CAD.

　　The method is the same, but remember that for USD/JPY, the pip is the second decimal place (0.01).

　　Let's say you sell USD/JPY at 157.45 and buy back at 157.10.

• Calculation: 157.45 - 157.10 = 0.35
• Result: You made a 35-pip gain

　　For other indirect pairs like USD/CHF, the normal fourth decimal place rule applies. A move from 0.9050 to 0.9080 would be a 30-pip move.

　　

Cross-Currency Pairs

　　Cross-currency pairs don't include the U.S. Dollar at all. Examples are EUR/GBP, AUD/NZD, or GBP/JPY.

　　Calculating pips works the same way. For most crosses like EUR/GBP, look at the fourth decimal place. For pairs with the Yen like EUR/JPY, look at the second place.

　　Say you buy EUR/GBP at 0.8450 and it rises to 0.8490.

• Calculation: 0.8490 - 0.8450 = 0.0040
• Result: You made a 40-pip gain

　　The main difference with cross-pairs comes when calculating the money value of those pips.

　　

From Pips to Profit: Pip Value

　　Knowing you made 40 pips is good. But what does that mean in dollars or euros？ This is where position size becomes important.

　　

The Role of Lot Size

　　The value of one pip depends directly on your trade size. A 20-pip move on a small trade might be worth a few dollars, while the same move on a large trade could be worth hundreds.

　　Here are the standard lot sizes:

• Standard Lot: 100,000 units of the base currency
• Mini Lot: 10,000 units
• Micro Lot: 1,000 units
• Nano Lot: 100 units

　　The bigger your lot size, the more money each pip is worth.

　　

The Pip Value Formula

　　The basic formula to calculate what one pip is worth is:

　　Pip Value = (One Pip in Decimal Form / Current Exchange Rate) * Lot Size

　　This gives you the pip value in the quote currency. You may need to convert this to your account currency.

　　There's a helpful shortcut. For any pair where USD is the quote currency (like EUR/USD, GBP/USD), the pip value is fixed:

• Standard Lot (100,000 units): 1 pip = $10
• Mini Lot (10,000 units): 1 pip = $1
• Micro Lot (1,000 units): 1 pip = $0.10

　　This is why many new traders start with these pairs.

　　

Pip Value Examples

　　For pairs where USD is not the quote currency, we must use the formula. The pip value will change as the exchange rate changes.

　　Let's calculate the pip value for a standard lot of USD/JPY at an exchange rate of 157.45.

• One Pip in Decimal Form: 0.01
• Current Exchange Rate: 157.45
• Lot Size: 100,000

　　Pip Value = (0.01 / 157.45) * 100,000 = 6.35 JPY

　　The pip value is 6.35 Japanese Yen. To find its value in USD: 6.35 JPY / 157.45 = ~$6.35.

　　This table shows approximate values for common lot sizes:

Currency Pair	One Pip	Standard Lot (100k) Pip Value	Mini Lot (10k) Pip Value	Micro Lot (1k) Pip Value
EUR/USD	0.0001	$10	$1	$0.10
GBP/USD	0.0001	$10	$1	$0.10
USD/JPY	0.01	~$6.35 (at 157.45)	~$0.63	~$0.06
USD/CHF	0.0001	~$11.05 (at 0.9050)	~$1.10	~$0.11

　　As you can see, pip values vary between pairs.

　　

Beyond Forex: Other Instruments

　　These principles work for other markets too. Understanding this makes you a more flexible trader who can analyze risk across different assets.

　　

Gold (XAU/USD)

　　For gold, traders often use "ticks" or "points" instead of pips. The smallest price move is typically $0.01, which is one tick.

　　A price move from $2350.50 to $2351.50 is a $1 move, also called 100 ticks or 100 points.

　　The money value depends on contract size. A standard gold futures contract is 100 troy ounces, so a $1 price move equals $100 profit or loss. CFD brokers offer smaller sizes.

　　

Stock Indices

　　For stock indices like the S&P 500 (often called US500 by brokers), movement is measured in whole index points.

　　A move from 5,300 to 5,301 is one full point.

　　The value of that point varies by broker. For one broker, a one-point move might be worth $10. For another, it could be $1 per point. Always check the details.

　　

The Universal Concept

　　The terms change—pips, points, ticks—but the core idea stays the same across all markets.

　　To manage risk, you need to know two things: the minimum price movement of what you're trading and its money value based on your position size.

　　

A Practical Walkthrough

　　Let's put everything together with a real trade example. We'll go from the initial idea to calculating profit and loss.

　　

Step 1: The Idea

　　Based on our analysis, we think the British Pound will strengthen against the U.S. Dollar. We decide to buy GBP/USD.

　　The current price is 1.2700.

　　

Step 2: Set Risk and Reward

　　Before trading, we define our exit points. This is essential for disciplined trading.

　　We set our Stop Loss 30 pips below our entry price to limit potential loss. We set our Take Profit 60 pips above entry, aiming for a 2:1 reward-to-risk ratio.

　　

Step 3: Calculate Price Levels

　　Now we convert those pip distances to actual price levels.

• Stop Loss Price: 1.2700 - 0.0030 = 1.2670
• Take Profit Price: 1.2700 + 0.0060 = 1.2760

　　We can now place our entry order with the Stop Loss and Take Profit orders.

　　

Step 4: Calculate P&L

　　Next, we decide our position size. We choose a mini lot (0.1 lots or 10,000 units).

　　Since we're trading GBP/USD, where USD is the quote currency, we know the pip value for a mini lot is $1 per pip.

　　Now we can calculate our potential money risk and reward.

• Potential Loss: 30 pips * $1/pip = $30
• Potential Profit: 60 pips * $1/pip = $60

　　We now have a complete picture of the trade before we even start.

　　

A Lesson from Experience

　　In my early trading days, I once ignored the pip value for EUR/JPY. I set my stop loss 50 pips away, thinking it was a $50 risk like on EUR/USD. The trade went against me, and I lost over $75 because the pip value was higher. This taught me to always calculate the money risk before entering any trade.

　　

Smart Trading: Use a Calculator

　　While understanding manual calculations is important, in live trading, speed and accuracy matter most. This is where tools help.

　　Nearly every pro trader uses an online pip calculator. These tools instantly find the pip value for any pair, lot size, and account currency, removing the risk of mistakes.

　　We strongly suggest using a calculator. Use it to check your manual calculations as you learn. This builds both skill and confidence.

　　

Conclusion: Your Trading Superpower

　　We've covered everything from what a pip is to the complex details of calculating its money value. We defined pips and pipettes, learned formulas for all pair types, converted pips to currency, and applied it all in a real example.

　　Mastering how to calculate pips in forex is more than math. It's the key to professional risk management. It lets you know your exact financial risk on every trade before you take it.

　　Practice these calculations until they become second nature. This knowledge forms the foundation for a long and successful trading career.