In forex trading, pip value can be a confusing topic. A pip is a unit of measurement for currency movement. A pip is the fourth decimal place in most currency pairs. For example, if the EUR/USD moves from 1.1015 to 1.1016, that's a one pip movement. Most brokers provide fractional pip pricing, so you'll also see a fifth decimal place such as 1.10165, where the five represents a half pip.

How much of a profit or loss a pip of movement produces depends on the currency pair you are trading, and the currency you opened your account with. Pip value matters because it affects risk. If you don't know what the pip value is, you can't precisely calculate the ideal forex position size for a trade, and you may end up risking too much or too little on a trade.

## Pip Value Calculation When Trading a USD Account

The most heavily traded currency pairs in the world involve the U.S. dollar (USD). When the USD is listed second in a pair the pip value is fixed and doesn't change, assuming you have a USD dollar account.

The fixed pip amount is:

- $10 for a standard lot which is 100,000 worth of currency.
- $1 for a mini lot which is 10,000 worth of currency.
- $0.10 for a micro lot is 1,000 worth of currency.

These pip values apply to any pair where the USD is listed second, such as the EUR/USD, GBP/USD, AUD/USD, NZD/USD

If the USD isn't listed second:

- Divide the pip values above by the USD/XXX rate.

For example, to get the pip value of a standard lot for the USD/CAD, when trading a USD account, divide $10 by the USD/CAD rate. If the USD/CAD rate is 1.2500 the standard lot pip value in USD is $8, or $10 divided by 1.25.

## Pip Value Calculation for a Non-USD Account

Whatever currency the account is, when that currency is listed second in a pair the pip values are fixed.

For example, if you have a Canadian dollar (CAD) account, any pair that is XXX/CAD, such as the USD/CAD will have a fixed pip value. A standard lot is CAD$10, a mini lot is CAD$1, and a micro lot is CAD$0.10.

To find the value of a pip when the CAD is listed first, divide the fixed pip rate by the exchange rate. For example, to find the value of a mini lot, if the CAD/CHF exchange rate is 0.7820, a pip is worth CAD$1.27.

If the pair includes the JPY, for example the JPY/CAD, then multiply the result by 10. For example, if the CAD/JPY is priced at 89.09, to find out the standard pip value divide CAD$10 by 89.09, then multiply the result by 10, for a pip value of CAD$11.23.

Go through this process with any account currency to find pip values for pairs that include that currency.

## Pip Value For Other Currency Pairs

Not all currency pairs include your account currency. You may have a USD account, but want to trade the EUR/GBP. How's how to figure out the pip value for pairs that don't include your account currency.

The second currency is always fixed if a person had an account in that currency. For example, we know that if a person held a GBP account then the EUR/GBP pip value is GBP10 for a standard lot, as discussed above. The next step is converting GBP10 to our own currency. If our account is USD, divide GBP10 by the USD/GBP rate. If the rate is 0.7600, then the pip value is USD$13.16.

If you can only find a "backward" quote, such as the GBP/USD rate being 1.3152, then divide one by the rate to get 0.7600. That is the USD/GBP rate. You can then do the calculation above.

If your account currency is euros and you want to know the pip value of the AUD/CAD, remember that for a person with a CAD account a standard lot would be CAD$10 for this pair. Convert that CAD$10 to euros by dividing it by the EUR/CAD rate. If the rate is 1.4813, the standard lot pip value is EUR6.75.

Always consider which currency is providing the pip value: the second currency (YYY). Once you know that, convert the fixed pip value in that currency to your own by dividing it by XXX/YYY, where XXX is your own account currency.

Understanding how pip values work is important, but if you want some help, BabyPips offers a useful Pip Value Calculator. Play around in a demo account and notice how pip movements affect your profit and loss for various pairs and lot sizes.