Pip Calculator

What Is a Pip?

“Pip” is an acronym for percentage in point or price interest point. A pip is the smallest whole unit price move that an exchange rate can make, based on forex market convention.

Most currency pairs are priced out to four decimal places and a single pip is in the fourth decimal place (i.e., 1/10,000th). For example, the smallest whole unit move the USD/CAD currency pair can make is $0.0001, or one pip.

Pips, which are used in forex trading, should not be confused with bps (basis points) used in interest rates markets that represent 1/100th of 1% (i.e., 0.01%).

Calculating Pip Value

The value of a pip depends on the currency pair, the exchange rate, and the trade value. When your forex account is funded with U.S. dollars and USD is the second of the pair (or the quote currency), such as with the EUR/USD pair, the pip is fixed at .0001.

In this case, the value of one pip is calculated by multiplying the trade value (or lot size) by 0.0001. So, for the EUR/USD pair, multiply a trade value of, say, 10,000 euros by .0001. The pip value is $1. If you bought 10,000 euros against the dollar at 1.0801 and sold at 1.0811, you’d make a profit of 10 pips or $10.