What is a pip? (and why it matters)
When you watch a forex price, the numbers wiggle in tiny steps. Traders measure those steps in pips. Once you understand pips, you can understand profits, losses and stop losses.
The simple definition
For most currency pairs, a pip is the fourth decimal place. If EUR/USD moves from 1.0850 to 1.0851, it moved 1 pip. If it moves to 1.0900, it moved 50 pips.
Pairs that include the Japanese yen are the exception: a pip is the second decimal place (150.25 to 150.26 is 1 pip).
Many brokers show one extra digit (1.08513). That small last digit is a pipette, one-tenth of a pip.
What about gold (XAU/USD)?
Gold is quoted in US dollars per ounce, like 4,165.42. Brokers don’t all agree what a “pip” is on gold. On this site we use the common convention that 1 pip = $0.10 of price movement. So a move from 4,165.00 to 4,170.00 ($5) is 50 pips. Always check how your own broker counts it.
How much is one pip worth?
That depends on your trade size (called a lot):
- 1 standard lot (100,000 units) of EUR/USD: about $10 per pip
- 1 mini lot (0.10): about $1 per pip
- 1 micro lot (0.01): about $0.10 per pip
- Gold, 1 lot (100 oz): $0.10 move × 100 oz = $10 per pip
Why pips matter to you
You’ll set your stop loss in pips, and you’ll use pips to decide how big a trade should be. Our lot size calculator does the math for you.