Calculating Pip Value in Different Forex Pairs and Account Currencies

How to calculate pip value regardless of forex pair or account currency

When you start 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 5 represents a half pip.

How much of a profit or loss a pip move produces depends on the currency pair you are trading, and the currency you opened your account with. Pip value matters because it affects your 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 Calcuation When Trading USD Account

pip value by currency pair and account currency
Pip value is affected by the currency pair traded and your account currency. Learn how to calculate pip value. Getty Images

The most heavily traded currency pairs in the world involve the US dollar (USD). When the USD is listed second in a pair, then the pip value is fixed (doesn't change) if you have a USD account (opened the account by depositing USD).

The fixed pip amount is:

  • $10 for a standard lot (100,000)
  • $1 for a mini lot (10,000)
  • $0.10 for a micro lot (1,000)

This pip value applies 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 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. If the USD/CAD rate is 1.2500, the pip value in USD is $8 (or 10/1.25)

Pip Value Calculation for USD Pairs in Non-USD Account

If the USD is listed second in the pair, but you are not trading a USD account, convert the pip value into your own currency. From above we know that one pip is worth $10 (for a standard lot) in USD.

To convert the pip value to your account currency:

  • Divide $10 by the XXX/USD exchange rate. Where XXX is your account currency.

For example, if your account currency is in Euros, divide $10 by the EUR/USD rate. If the current EUR/USD rate is 1.1062 then the pip value in Euros is $10 / 1.1061 = 9.04.

Not all USD currencies are quoted with the USD as the second currency though. In order to convert the fixed pip values to your own currency when your currency is quoted as USD/XXX, instead of XXX/USD, requires an additional step.

Assume you have a Canadian account. To find the value of a mini lot pip you need to divide $1 by the CAD/USD exchange rate. Most financial websites and trading platforms provide the price for the USD/CAD, not the CAD/USD (order matters).

  • To convert the USD/CAD to CAD/USD, divide 1 by the USD/CAD.

If the USD/CAD rate is 1.25, the CAD/USD rate is 0.8. The mini lot pip value is therefore $1 divided by 0.8, equals 1.25.

If your account is in another currency, go through the above steps, substituting your own currency in for XXX.

Other Currency Pairs

If the second currency in a pair is the same currency as your trading account, then the pip value is fixed. For example, if you are trading the EUR/GBP and your account is in GBP, then each pip is worth 0.10 GBP for a micro lot, 1 GBP for a mini lot and 10 GBP for a standard lot.

JPY pairs are an exception again, the pip values for JPY accounts--with JPY listed as the second currency--are 10 for a micro lot, 100 for a mini lot and 1000 for a standard lot.

To convert into your own currency, you need to convert the GBP to your own currency. To do this, divide the pip value you now know (GBP in this case) by the XXX/GBP. If your account is in Euros, and the current EUR/GBP rate is 0.7085, then the value of a standard lot pip in Euros is 10 GBP divided by 0.7085, equaling 14.11.

No matter what pair it is, pip value of the second currency listed will be 0.1, 1 or 10 (depending on lot size) for someone who has an account denominated in that currency (except for JPY pairs). Once we know that, we can convert it to any currency we want.

For example, a standard lot in the AUD/CAD is 10 CAD because the CAD is listed second, regardless of the rate. To get the pip value, divide 10 CAD by XXX/CAD, with XXX being your 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.

Calculating Pip Value - Final Word

Always consider which currency is providing the pip value--the second currency (YYY). Once you know that, you can convert the pip value in that currency to your own by dividing it by XXX/YYY, where XXX is your own account currency. Pip values matter because they can vary greatly by currency pair and depending on account currency. In order to keep risk controlled and position size calibrated, its important to understand how pip values work.