FOREX · Beginner · 7 min read · 3 Nov 2026 · Navion Pro Research
Pips, Lots and Pip Value, with a Worked Example
Forex traders measure price moves in pips and trade sizes in lots. Put the two together and you know exactly what each move is worth to you. This guide shows how, step by step.
Trading leveraged products carries a high level of risk to your capital. Losses can exceed deposits. Past performance is not an indicator of future results.
Key Points
- A pip is the standard unit for measuring a move in a currency pair. For most pairs, it is the fourth decimal place, 0.0001.
- For pairs that include the Japanese yen, a pip is the second decimal place, 0.01.
- A lot is a trade size. 1 standard lot is 100,000 units of the first currency in the pair.
- Pip value tells you how much money you make or lose for each pip the price moves. It depends on the pair and the size of your trade.
What a pip is
A pip is the smallest standard move traders use to describe a change in an exchange rate.
| Pair type | Example quote | One pip |
|---|---|---|
| Most pairs | EUR/USD at 1.1600 | 0.0001 |
| Pairs with the Japanese yen | USD/JPY at 150.00 | 0.01 |
If EUR/USD moves from 1.1600 to 1.1625, it has moved 25 pips. If USD/JPY moves from 150.00 to 150.40, it has moved 40 pips.
Many platforms show one more digit than the pip, such as 1.16005. That extra digit is a fraction of a pip, often called a pipette or point. Ten pipettes make one pip.
What a lot is
A lot is the size of a forex trade, measured in units of the first currency in the pair, the base currency.
| Trade size | Lots | Units of the base currency |
|---|---|---|
| Standard | 1.00 | 100,000 |
| Mini | 0.10 | 10,000 |
| Micro | 0.01 | 1,000 |
So 0.10 lot of EUR/USD means trading 10,000 euros against the dollar. The smallest trade on Navion Pro is 0.01 lot.
How to work out pip value
Pip value is the amount one pip is worth for your trade size. The simplest case is a pair where the US dollar is the second currency, such as EUR/USD:
Pip value = one pip × units traded
- 1 lot of EUR/USD: 0.0001 × 100,000 = $10 per pip.
- 0.10 lot: 0.0001 × 10,000 = $1 per pip.
- 0.01 lot: 0.0001 × 1,000 = $0.10 per pip.
When the dollar is the first currency, such as USD/JPY, the pip value comes out in yen, so you convert it back to dollars:
- 1 lot of USD/JPY: 0.01 × 100,000 = ¥1,000 per pip.
- At an example price of 150.00: ¥1,000 ÷ 150 = about $6.67 per pip.
For pairs without the dollar, such as EUR/GBP, the pip value comes out in the second currency, here pounds, and is converted at the current rate. The platform works out pip value for you, but knowing the steps helps you size trades with confidence.
An example: a EUR/USD trade from entry to exit
This example is for illustration only.
A trader buys 0.10 lot of EUR/USD at 1.1600. Each pip is worth $1.
- If the price rises to 1.1645, the trade gains 45 pips: 45 × $1 = $45, before costs.
- If the price falls to 1.1570, the trade loses 30 pips: 30 × $1 = $30, before costs.
- The margin. The position is worth 10,000 euros, or $11,600 at 1.1600. At an example leverage of 100 times, the margin is $116.
- The costs. The spread is paid in pips when the trade opens, so its cost is the spread in pips × $1. A commission is also charged on each trade, and a swap applies if the position is held past the daily rollover at 17:00 ET.
A 30 pip move against the trade cost about a quarter of the margin. Leverage makes small moves count.
Once you know your pip value, you can turn any price move into money before you place the trade.
Why this matters for risk
Pip value links your stop loss to the money you could lose. If you plan to risk $20 on a trade with a 40 pip stop loss, each pip can be worth no more than $0.50, which on EUR/USD means a trade of 0.05 lot.
| If you | Then your loss on a 40 pip stop is |
|---|---|
| Trade 0.01 lot of EUR/USD | $4 |
| Trade 0.05 lot of EUR/USD | $20 |
| Trade 0.10 lot of EUR/USD | $40 |
| Trade 1.00 lot of EUR/USD | $400 |
The same stop loss can mean a small loss or a large one. The trade size decides which.
Risk disclosure: Trading involves significant risk of loss and is not suitable for all investors. Past performance is not indicative of future results. This brief is for information and education only. It is not investment advice, a recommendation or an instruction to buy or sell anything. The likely market reactions described here are our assessments of what could happen, not predictions, and markets can and often do move differently. Figures and forecasts come from third party sources and may change. Make your own decisions, and consider independent advice if you are unsure.
