In short
- A pip is 0.0001 on most pairs and 0.01 on JPY pairs.
- Pip value per standard lot = 10 units of the quote currency (e.g. $10 on GBP/USD, £10 on EUR/GBP).
- Convert to pounds using the current exchange rate.
What a pip is
"Pip" stands for "percentage in point" or "price interest point". It's the standard unit for measuring price changes in currency pairs.
- For most pairs, a pip is the fourth decimal place: GBP/USD moving from 1.2700 to 1.2701 is a one-pip move.
- For pairs involving the Japanese yen, it's the second decimal place: USD/JPY from 149.80 to 149.81 is one pip.
- Many brokers quote an extra digit, called a pipette (one tenth of a pip).
Lot sizes
| Lot | Units of base currency | Pip value on GBP/USD |
|---|---|---|
| Standard | 100,000 | $10 |
| Mini | 10,000 | $1 |
| Micro | 1,000 | $0.10 |
How to calculate pip value
Pip value = pip size × position size, in the quote (second) currency. Then convert to your account currency.
Example 1: EUR/GBP (quote currency is GBP)
0.0001 × 100,000 = £10 per pip per standard lot. No conversion needed.
Example 2: GBP/USD (quote currency is USD)
0.0001 × 100,000 = $10 per pip. At GBP/USD 1.2711, that's $10 ÷ 1.2711 ≈ £7.87 per pip.
Example 3: GBP/JPY
0.01 × 100,000 = ¥1,000 per pip. At GBP/JPY 190.44, that's ¥1,000 ÷ 190.44 ≈ £5.25 per pip.
Pips and profit or loss
If you buy one mini lot of GBP/USD at 1.2700 and sell at 1.2750, you've made 50 pips. At $1 per pip, that's $50 — about £39 at 1.27. A 50-pip move against you would lose the same amount, plus the spread.
Pips and spreads
Spreads are quoted in pips too. A 0.9-pip spread on one standard lot of GBP/USD costs about $9 (≈ £7) every time you open and close a trade.
Next step: use pip value to size trades safely with the 1% rule.
Pip values for common pairs in GBP
Approximate value of one pip per standard lot (100,000 units), using illustrative exchange rates. Recalculate with live prices before trading.
| Pair | Pip in quote currency | Illustrative rate used | ≈ Pip value in GBP |
|---|---|---|---|
| EUR/GBP | £10 | — | £10.00 |
| GBP/USD | $10 | GBP/USD 1.2711 | £7.87 |
| EUR/USD | $10 | GBP/USD 1.2711 | £7.87 |
| USD/JPY | ¥1,000 | GBP/JPY 190.44 | £5.25 |
| GBP/JPY | ¥1,000 | GBP/JPY 190.44 | £5.25 |
For a mini lot divide by 10; for a micro lot divide by 100.
Pips in spread betting
Spread bets are sized in pounds per point. On major pairs most brokers define one point as one pip, so a £1-per-point bet on GBP/USD makes or loses £1 for each pip — no currency conversion needed. Always check your broker's definition of a point for each market.
Pips, points and ticks: avoiding confusion
- Pip: the standard unit for currency pairs (0.0001, or 0.01 for JPY pairs).
- Pipette: one tenth of a pip, shown as the last small digit on many platforms.
- Point: on MetaTrader, a "point" is the smallest price increment — often a pipette, so 10 points = 1 pip. In spread betting, a point is usually one pip on FX.
- Tick: the minimum price change for an instrument, used mostly for futures and indices.
Common mistakes
- Setting a "50-point" stop on MT4 and getting 5 pips because the platform uses 5-digit pricing
- Forgetting to convert dollar pip values into pounds
- Assuming every pair has the same pip value
Frequently asked questions
What is a pipette?
A pipette is a tenth of a pip — the fifth decimal place on most pairs (third on JPY pairs). Many brokers quote prices to pipettes.
How much is 1 pip on GBP/USD?
On one standard lot, $10. In pounds that's $10 divided by the GBP/USD rate — about £7.87 at 1.27.
How much is 1 pip on EUR/GBP?
On one standard lot, £10, because the pair is quoted in pounds.
CFDs and spread bets are complex instruments and come with a high risk of losing money rapidly due to leverage. Most retail investor accounts lose money when trading these products. You should consider whether you understand how they work and whether you can afford to take the high risk of losing your money. Content is general information, not financial or tax advice.