Our pip value calculator will tell you the value of a pip in the currency you want to trade in. This information is crucial in determining if a trade is worth the risk, and in managing that risk appropriately.
The value of a pip is calculated by multiplying the amount of the trade in lots by one pip in decimal form, and then dividing it by the current exchange rate of the quote currency in your pair.
‘Pip’ stands for ‘point in percentage’ . It’s the measure of movement in the exchange rate between the two currencies.
In most forex currency pairs, one pip is a movement in the fourth decimal place (0.0001), so it’s equivalent to 1/100 of 1%.
In currency pairs that include the Japanese Yen (JPY) a pip is quoted with two decimal places instead of four, so the second digit after the decimal point is the pip.
Using these small units to measure price movement protects investors from massive losses. If, for example, a pip was 10 basis points instead of one, a one-pip change would cause far greater volatility in currency values.
In addition to the standard pip, most forex brokers also offer ‘fractional pip pricing’. This adds a fifth decimal place, so a fractional pip is one tenth of a pip. Fractional pips can allow for tighter spreads, and give a better understanding of a currency price’s movements.