What is a Pip (and Why It Matters)

In forex trading, a pip is the smallest price increment in a currency pair quote. For most major pairs, one pip equals 0.0001 (fourth decimal). For pairs that involve the Japanese yen, one pip is usually 0.01. The pip is the unit traders use to measure price movements, profit/loss and position sizing. The monetary value of a pip depends on your account currency, the currency pair you trade, and your lot size, which is why a pips calculator is essential.

How the Pips Calculator Works

Our Pips Calculator takes four simple inputs:

• Currency pair: The pair you trade (e.g., EUR/USD, USD/JPY).
• Lot size: Position size expressed as lots (1.0 = standard 100,000 units; 0.1 = 10,000; 0.01 = 1,000 etc.).
• Entry & Exit price: The two price points to calculate the pip difference.

Real Examples (step-by-step)

Example 1 — EUR/USD

Inputs:

• Pair: EUR/USD
• Lot: 0.1 (10,000 units)
• Entry: 1.16537, Exit: 1.16437 → Movement = 0.00100 = 10 pips

Calculation:

pip size = 0.0001
value per pip (quote) = pip size / price * units
= 0.0001 / 1.16487 * 10,000 per pip
total moved = 10 pips

Notes: MetaTrader and brokers sometimes display slightly different numbers because they:

• use the exact contract size per instrument (not always 100,000),
• use the live bid/ask midpoint or last trade price,
• or apply rounding/truncation for display.

Example 2 — USD/JPY

Inputs:

• Pair: USD/JPY
• Lot: 1 (100,000 units)
• Entry: 110.25, Exit: 110.75 → Movement = 0.50 = 50 pips (since JPY pairs use 0.01)

Calculation:

pip size = 0.01
value per pip (quote) = pip size / price * units
= 0.01 / 110.50 * 100,000 per pip
total moved = 50 × 9.05
Convert to account USD if needed via conversion rate.

Common Pitfalls & Why Values May Differ

• Contract size mismatch: Not every instrument uses 100,000 units. Some brokers use micro-contracts or instrument-specific sizes.
• Bid/Ask difference: Using bid vs mid price or ask will change the pip-per-value slightly.
• Currency conversion: If your account currency differs from the quote currency, conversion rates will alter the displayed value.
• Rounding: UI rounding (two decimals) can create small apparent mismatches vs platforms that display more precision.

How to Use Our Pips Calculator (Quick Guide)

1. Select the currency pair (majors, crosses, exotics - pip size auto-updates for JPY pairs).
2. Enter lot size. You can enter decimal lots (1.0, 0.1, 0.01). The calculator converts to units automatically.
3. Enter entry and exit prices. Press Calculate. You’ll get pips moved, value per pip, and total moved value.
4. Use the result for risk management: Combine total moved value with your desired risk percent to compute position size or adjust stop loss.

Advanced Notes: Contract Sizes, CFDs & Crypto Pairs

If you trade CFDs or broker-specific instruments, contract sizes and pip definitions can change. Crypto pairs often have different decimal precision and may use “tick” sizes rather than classic pip rules. Always confirm your broker’s contract specs.

Frequently Asked Questions

What is a pip for JPY pairs?

A pip for JPY pairs is typically 0.01 (two decimal places).

Why does my calculator show different numbers than MT5?

MT5 may use the exact instrument contract size, live bid/ask midpoint, or broker-specific rounding. Our calculator uses standard formulas; small differences are normal.

Do I need live FX rates to convert values?

Yes, if your account currency differs from the quote currency, use a live FX API for real conversions. For many practical checks you can use a recent rate snapshot.

The Pips Calculator is a simple but powerful risk-management tool. Use it before placing trades to understand the monetary impact of stop losses, take profits, and position size. When combined with position sizing calculators and a sound risk plan, it helps keep your trading disciplined and consistent.

Note: This content is educational and not financial advice. Always test calculations with your broker’s contract specifications.