Lesson 4 of 11 · 8 min
Pips and lots
How price moves are measured, how trade sizes are measured, and how the two combine into money.
By the end you'll be able to
- Count the pips between any two prices
- Describe standard, mini and micro lots in units
- Convert a pip move into dollars for a given lot size
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“EUR/USD is up 30 pips.” Whether that is a lot depends on your position size. On EUR/USD, 30 pips is $300 on a standard lot and $3 on a micro lot.
A pip measures the move
A pip is the standard unit of price change.
- For most pairs, it is the fourth decimal place:
0.0001. - For pairs quoted in Japanese yen, it is the second decimal:
0.01.
If EUR/USD moves from 1.0850 to 1.0875, that is 0.0025, or 25 pips. If USD/JPY moves from 150.20 to 150.50, that is 30 pips.
Many brokers show one extra decimal, a pipette, which is a tenth of a pip. 1.08523 is 1.0852 and 3 pipettes.
A lot measures the size
Each square is 1,000 units of the base currency. A standard lot is 100 of them.
A lot is a fixed quantity of the base currency:
| Lot | Units | Value of 1 pip* |
|---|---|---|
| Standard | 100,000 | $10 |
| Mini | 10,000 | $1 |
| Micro | 1,000 | $0.10 |
* For pairs where the quote currency is USD, such as EUR/USD, GBP/USD and AUD/USD. For USD/JPY it is roughly $6.67 per standard lot at 150.00, because the pip is in yen and has to be converted.
Where does $10 come from? One pip (0.0001) times 100,000 units equals 10 units of the quote currency.
Try it
The highlighted digit is the pip. For USD/JPY the pip is the second decimal and its dollar value depends on the price.
Notice how the same 25-pip move is worth $250 on a standard lot and $2.50 on a micro lot. The market move didn’t change; your exposure did.
Quick check
Question 1 of 3
GBP/USD moves from 1.2700 to 1.2655. How many pips is that?
Question 2 of 3
How many units of the base currency are in a mini lot?
Question 3 of 3
A 30-pip gain on 3 micro lots of EUR/USD is worth about:
Go deeper: Lot sizes in forex explained · How to Calculate Forex Profit and Loss · Pip Value Calculator: How to Work Out Pip Value for Any Pair · What Is a Pip in Forex? Meaning, Value and Examples