Forex Pip Calculator: How to Calculate Pip Value

The foreign exchange market (Forex) is the largest financial market in the world, with trillions of dollars traded daily. If you’re a trader, understanding PIPs (Percentage in Point) is crucial, as they measure price changes between currency pairs and help assess your profits and losses.

In this guide, we’ll break down what a PIP is, how it works, how to calculate it, and why it matters in Forex trading.

We’ve also made it simple for you with our free PIP Calculator — quickly calculate PIP values to manage risk, optimize trades, and make smarter trading decisions.

What is a PIP in Forex?

A PIP (Percentage in Point) is the smallest price movement a currency pair can make in most forex trading platforms.

For most currency pairs, a PIP is equal to the fourth decimal place of an exchange rate.

For example

If the USD/CAD exchange rate moves from 1.3142 to 1.3176, that’s a change of 34 PIPs.

Since forex markets move quickly, PIPs provide a standardized unit to measure price changes efficiently.

Why Are PIPs Important in Forex Trading?

PIPs play a key role in:

• Calculating profits and losses – PIPs help traders measure how much they gain or lose per trade.
• Managing risk – Traders set stop-loss and take-profit levels using PIPs.
• Understanding spreads – Brokers charge fees through spreads, which are measured in PIPs.

What Is a Spread in Forex?

A spread is the difference between the buy price (bid) and sell price (ask) of a currency pair. This is how brokers make money instead of charging direct commissions.

For example

• If the USD/CAD buy price is 1.5763 and the sell price is 1.5761, the spread is 0.0002 (or 2 PIPs).
• A narrower spread (lower PIP difference) means lower trading costs.

How Do PIPs Work with the Japanese Yen (JPY)?

For most currencies, a PIP is the fourth decimal place (e.g., 0.0001). However, the Japanese Yen (JPY) is an exception because it is priced differently.

For JPY pairs, a PIP is the second decimal place (e.g., 0.01 instead of 0.0001).

For example

If USD/JPY moves from 120.50 to 120.75, that’s a 25 PIP movement, instead of using four decimal places like most other pairs.

What Is Forex Pair Volatility?

Volatility refers to how much a currency pair moves in PIPs over a certain period (such as a day). More volatile pairs experience bigger price swings, creating profit opportunities — but also increasing risk.

To measure volatility, traders compare the highest and lowest prices of a currency pair in a given timeframe.

Formula for Volatility:

Volatility = Highest price − Lowest price

For example

If USD/CAD reaches a high of 1.5789 and a low of 1.5743, the daily volatility is 46 PIPs.

Types of Forex Currency Pairs

Forex pairs fall into three categories:

• Major Pairs – Include the U.S. dollar and the most traded global currencies:
• EUR/USD ("Fiber") – Accounts for nearly 25% of forex trades worldwide.
• USD/JPY ("Ninja") – The second most traded pair.
• GBP/USD ("Cable") – Strongly linked to the EUR/USD.
• USD/CHF ("Swissy") – Popular due to Switzerland’s economic stability.
• Minor Pairs – Currency pairs that don’t include the U.S. dollar but involve major global currencies.
• Exotic Pairs – Less commonly traded pairs from emerging economies, often with higher volatility and larger spreads.

Good to know

Pairs that don’t involve the U.S. dollar often experience greater PIP movements compared to major pairs, making them more volatile.

How to Calculate the Value of a PIP in Forex

The value of a PIP depends on the currency pair and the size of the trade.

Here’s the formula:

PIP Value = (PIP Change x Lot Size) ÷ Exchange Rate

For example

Imagine USD/CAD moves from 1.2001 to 1.2002 (1 PIP change).

• Lot size = 100,000 units
• Exchange rate = 1.2002

PIP Value = (0.0001×100,000) ÷​ 1.2002 = 9.81USD

Forex trading platforms automatically calculate PIP values, but understanding them helps with risk management.

How to Use Our Forex PIP Calculator

Calculating PIPs manually can be time-consuming. That’s why we offer a free and easy-to-use PIP Calculator to help traders instantly determine their profit or loss on any trade.

• Enter the number of PIPs moved
• Select the currency pair (e.g., USD/CAD)
• Enter the trade size (lot size)
• Choose your deposit currency

Click "Calculate", and the tool will display the exact PIP value for your trade.

What’s the Difference Between a PIP, Pipette, and Lot?

• PIP (Percentage in Point): The standard unit for measuring price changes in forex.
• Pipette: A fraction of a PIP (1/10th of a PIP) used by brokers with 5 decimal places.
• Lot Size: The amount of currency traded.

Common Lot Sizes:

• Nano Lot = 100 units
• Micro Lot = 1,000 units
• Mini Lot = 10,000 units
• Standard Lot = 100,000 units

For example, if you trade 50,000 units, you’re using 5 mini lots.

How to Calculate Profit or Loss Using PIPs

Example of a Profitable Trade

• You trade 3 standard lots of USD/CAD.
• Your trade closes at 1.1420, gaining 70 PIPs.

PIP Value Calculation

(0.0001 × 300,000) ÷ 1.1420 = 26.27USDperPIP

Total Profit = 26.27 × 70 = 1,839USD

Example of a Losing Trade

• You trade 5 mini lots of USD/JPY.
• Your trade closes at 120.55, losing 70 PIPs.

PIP Value Calculation

(0.01×50,000) ÷ 120.55 = 4.14USDperPIP

Total Loss: 4.14 × 70 = 290USD

How PIPs Impact Your Trading Risk

While PIPs help measure market movements, trading with high leverage can magnify both profits and losses.

Key Risk Factors:

• Leverage Increases Risk – Higher leverage means larger position sizes, which increases your profit or loss per PIP movement.
• Market Volatility – Sudden price swings can result in rapid PIP movements, causing unexpected losses.
• Holding Overnight – Keeping positions open overnight may result in swap fees, impacting overall profitability.

For example

If you trade 1 lot (100,000 units) of EUR/USD with 50:1 leverage, a 10 PIP movement results in:

• $100 profit if the trade goes in your favor
• $100 loss if the market moves against you

If a trader doesn’t use a stop-loss, a sudden 50 PIP move could wipe out a significant portion of their account.

Pro Tip: Always use stop-loss orders to limit potential losses and avoid excessive leverage to protect your capital.

How to Use PIPs in Your Trading Strategy

Understanding how PIPs work helps traders develop effective trading strategies based on market movements.

Common Trading Strategies & PIP Targets:

• Scalping – Aims for 5-15 PIPs per trade, holding positions for seconds or minutes.
• Day Trading – Targets 20-50 PIPs per trade, holding positions for a few hours.
• Swing Trading – Aims for 100+ PIP movements, holding trades for days or weeks.
• Position Trading – Long-term strategy holding trades for weeks or months, with 300+ PIP profit targets.

For example

If a day trader targets 30 PIPs per trade, and their PIP value is $10, they can expect:

• $300 profit per winning trade
• $300 loss per losing trade (if no stop-loss is used)

Pro Tip: Choosing the right PIP target depends on your trading style and risk tolerance.

How News & Events Impact PIP Movements

Major economic events can cause large PIP swings, impacting forex trading.

Top Market Events That Affect PIP Volatility:

• Interest Rate Decisions – Federal Reserve policy changes can move the market 100+ PIPs.
• Non-Farm Payrolls (NFP) – U.S. job reports can trigger fast 50-100 PIP price swings.
• GDP & Inflation Reports – Economic data affects currency demand, shifting PIPs.
• Central Bank Announcements – Policy statements from the Federal Reserve or European Central Bank (ECB) can create big forex moves.

For example

If the Federal Reserve raises interest rates unexpectedly, the USD could gain 100+ PIPs against other currencies.

If U.S. inflation rises sharply, it could weaken the dollar, leading to a 50 PIP drop in USD pairs.

Pro Tip: Trading during major news releases means higher volatility—use stop-losses wisely to avoid excessive risk.

Forex PIP Cheat Sheet: Quick Reference for Traders

This PIP value chart helps you estimate your potential profit or loss per PIP movement.

Pro Tip: Before entering a trade, check this table to estimate risk and potential profits based on your lot size.

PIPs aren’t just technical measurements—they are key to making informed trading decisions. By understanding how PIPs work, traders can minimize risk, maximize profits, and build long-term success in forex trading.

To make things even easier, use our free PIP Calculator to quickly determine PIP values, manage risk, and optimize your trades with confidence.