How to Calculate Pip Value in Forex – Easy Guide for Beginners (2025)

Understanding pip value is crucial in forex trading. A pip (short for “percentage in point”) is the smallest price movement a currency pair can make based on market convention. Knowing how to calculate pip value helps in proper risk management and position sizing.

📘 What is a Pip?

A pip is typically the fourth decimal place in most currency pairs (e.g., EUR/USD). For example, if EUR/USD moves from 1.1000 to 1.1001, that’s a 1 pip move. In JPY pairs, it’s the second decimal.

🧮 Pip Value Formula

Pip Value = (One Pip / Exchange Rate) × Lot Size

For standard lots (100,000 units), 1 pip ≈ $10
For mini lots (10,000 units), 1 pip ≈ $1
For micro lots (1,000 units), 1 pip ≈ $0.10

📊 Example Calculation

Let’s say you trade 1 mini lot (10,000) of EUR/USD:
1 pip = (0.0001 ÷ 1.1000) × 10,000 = $0.91 (approx)

🔍 Why Pip Value Matters

• ✅ Helps calculate potential profit/loss
• ✅ Essential for setting stop-loss and take-profit
• ✅ Crucial for risk management and lot sizing

💼 Best Brokers to Practice Pip Calculations

• 🔹 Exness – Advanced trading tools & calculators 👉 Open Account
• 🔹 XM – Educational materials for beginners 👉 Join XM
• 🔹 JustMarkets – Ideal for small lot trading 👉 Start Now
• 🔹 IUX Markets – Low spreads & micro accounts 👉 Sign Up
• 🔹 Valetax – Beginner-friendly trading dashboard 👉 Try Now

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