How to Calculate Pips in Forex – Complete Guide for Beginners (2025)
💹 How to Calculate Pips in Forex – Complete Guide for Beginners (2025)
Master the most basic but powerful concept in forex – understanding and calculating pips correctly for any trade.
📌 What is a Pip?
A pip (Point in Percentage) is the smallest price movement in a currency pair. For most pairs, it’s the fourth decimal (0.0001), except JPY pairs where it’s the second decimal (0.01).
📐 Pip Calculation Formula
Pip Value = (1 pip ÷ Exchange Rate) × Lot Size
Example for EUR/USD:
- 1 pip = 0.0001
- Lot size = 100,000 (1 standard lot)
- Exchange rate = 1.1000
- Pip Value = (0.0001 ÷ 1.1000) × 100,000 = $9.09
📊 Pip Value by Lot Size
| Lot Size | Contract Size | Pip Value (USD) |
|---|---|---|
| Standard (1.00) | 100,000 | ~$10 per pip |
| Mini (0.10) | 10,000 | ~$1 per pip |
| Micro (0.01) | 1,000 | ~$0.10 per pip |
⚠️ Common Pip Mistakes to Avoid
- Ignoring pip size on JPY pairs
- Wrong lot size usage = wrong risk!
- Not using pip calculators for cross pairs
📈 Use Broker Pip Calculators
Most brokers offer pip calculators. These tools automatically calculate based on your lot size, currency pair, and account currency. Try it with one of the trusted brokers below:
📘 Final Words
Understanding how pips work gives you full control over your trading risk and reward. It’s the foundation of lot sizing, risk management, and profitability in forex.
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