Pips, points and lots: how price moves become money
- What a pip and a point are, on currencies, gold and indices
- What a lot is, and the sizes brokers offer
- How to turn a price move into dollars, for any trade size
Every trade is two numbers
A trade's result comes from just two things: how far the price moved and how big your position was. Pips measure the first; lots measure the second. Get these two right and you'll always know what a trade can make or cost before you open it.
What is a pip?
A pip is the standard unit for measuring a price move. On most currency pairs it is the fourth decimal place: if EURUSD moves from 1.1650 to 1.1651, it moved 1 pip.
- Most pairs (EURUSD, GBPUSD, AUDUSD…): 1 pip = 0.0001
- Yen pairs (USDJPY, EURJPY…): 1 pip = 0.01, because the price has only two or three decimals (e.g. 150.25)
- Gold (XAUUSD): most traders and brokers count 1 pip = 0.10, so a move from 3870.00 to 3871.00 is 10 pips. Some brokers count differently, so check yours.
- Indices (US30, NAS100, GER40): usually counted in points of 1.0. A move from 46,850 to 46,900 is 50 points.
Pips, pipettes and "points"
Most brokers quote one extra decimal: EURUSD 1.16505. That fifth digit is a pipette, a tenth of a pip. In MetaTrader, the smallest step is called a point, which on a five-digit quote is a pipette, not a pip. This is why a 20-pip stop is 200 points in MetaTrader settings. Mixing them up is one of the most common beginner errors.
What is a lot?
A lot is the size of your trade. On currencies:
| Lot | Size | Units of base currency |
|---|---|---|
| Standard | 1.00 | 100,000 |
| Mini | 0.10 | 10,000 |
| Micro | 0.01 | 1,000 |
On gold, 1 lot is usually 100 ounces. On indices and crypto the contract size depends on the broker, so open the symbol's specification in your platform before trading it.
From pips to money: pip value
The pip value is what one pip is worth for your position size. For any pair quoted in US dollars (EURUSD, GBPUSD, AUDUSD) it is simple:
For pairs where the dollar comes first (USDJPY, USDCAD), the pip value changes with the price. For USDJPY at 150.00: 0.01 × 100,000 ÷ 150 = about $6.67 per pip per standard lot.
For gold at 1 lot (100 oz), a 0.10 move (1 pip) is worth $10; a $1.00 move is worth $100.
Worked example
You buy 0.50 lots of EURUSD at 1.1650 and close at 1.1680. That's 30 pips. At 0.50 lots each pip is worth $5, so the trade made 30 × $5 = $150. Had it gone 30 pips against you, it would have cost $150 instead.
Try it
- Confusing points and pips in MetaTrader: a "20" stop becomes 2 pips instead of 20.
- Assuming every symbol pays $10 per pip per lot. Gold, yen pairs and indices all differ.
- Trading an index or crypto without checking its contract size first.
Check yourself
- A pip is 0.0001 on most pairs and 0.01 on yen pairs; gold is usually counted in 0.10 steps.
- A standard lot is 100,000 units; on USD-quoted pairs that is $10 per pip.
- Result = pips moved × pip value × lots. Know it before you click.