Glossary
Pip
A pip is the standard unit for price changes in forex: 0.0001 for most pairs and 0.01 for pairs quoted in Japanese yen.
What it means
Pips let traders describe price moves, spreads and stops in the same unit across currency pairs. Many platforms show one extra digit, a fractional pip or pipette, so EUR/USD might be quoted as 1.10005. Indices, metals and crypto usually move in points or ticks defined by the platform, although some traders still call these pips.
Pip value depends on the pair and the trade size. For pairs quoted in US dollars, such as EUR/USD, one pip on one standard lot is worth $10. For other pairs, the value changes with the exchange rate. Prop traders use pip value to size positions so that a stop loss fits inside the daily loss limit.
Worked example
Illustrative numbers: EUR/USD moves from 1.1000 to 1.1025, a move of 25 pips. A trader holding 2 standard lots gains 25 pips at $20 a pip, or $500. On 0.5 lots, the same move is worth $125.
Free tools that use this
- Lot size calculatorThis calculator gives the position size that loses your chosen risk, and no more, if your stop is hit. In words: lot size equals the amount you...
- Pip value calculatorThis calculator shows what one pip, point or tick is worth for your position, in your account currency. In words: pip value equals the size of one...
Start here
Start with an audit.
Tell us where your firm is today. We look at your site, your funnel and your marketing, then tell you what we would build first. There is no obligation to buy.
Instagram @propfirmstudios