A pip is the standard unit for measuring how far a currency price moves. For most pairs, such as EURUSD, one pip is a change in the fourth decimal place (0.0001). For pairs quoted against the Japanese yen, such as USDJPY, one pip is the second decimal place (0.01). Pips let traders compare moves, costs and risk in the same unit.
TL;DR: One pip is 0.0001 on most currency pairs and 0.01 on yen pairs. On a standard lot of EURUSD, one pip is worth about $10. Traders size positions by working backwards from the pips to their stop loss and the money they are willing to risk.
Educational content only, not a personal recommendation. Examples are illustrative. Alpha Capital accounts are simulated accounts with simulated funds, and performance fees are not guaranteed.
What does "pip" stand for?
"Pip" is usually read as "percentage in point" or "price interest point". The name matters less than the job it does: a pip gives every forex trader the same yardstick. If EURUSD moves from 1.0850 to 1.0875, it has moved 25 pips, whether you trade one micro lot or ten standard lots.
How do you count pips?
Look at the decimal place that the pip sits in for that pair, then count the change in that place.
Pair type | One pip | Example move | Pips |
|---|---|---|---|
Most pairs (EURUSD, GBPUSD, AUDUSD) | 0.0001 | 1.0850 to 1.0875 | 25 |
Yen pairs (USDJPY, EURJPY) | 0.01 | 150.20 to 149.80 | 40 |
What is a pipette?
Most platforms quote prices to one extra decimal place: five decimals on EURUSD (1.08502) and three on USDJPY (150.205). That extra digit is a pipette, or fractional pip, worth one tenth of a pip. When a spread is shown as 0.6 pips, the 6 is six pipettes.
How much is a pip worth?
A pip's money value depends on the pair, the size of the position and the exchange rate. For pairs where the US dollar is the second currency (the quote currency), the maths is simple:
Lot size | Units | Pip value on EURUSD |
|---|---|---|
Standard lot (1.00) | 100,000 | About $10 |
Mini lot (0.10) | 10,000 | About $1 |
Micro lot (0.01) | 1,000 | About $0.10 |
The general formula is: pip value = pip size × position size, converted into your account currency. For EURUSD, 0.0001 × 100,000 = $10.
Worked example: EURUSD (illustrative)
You buy 2 standard lots of EURUSD at 1.0850 and close at 1.0880. That is a 30-pip move. Each pip is worth about $10 per lot, so 30 pips × $10 × 2 lots = $600, before spread and commission. If price had fallen 30 pips instead, the loss would be the same $600.
Worked example: USDJPY (illustrative)
On USDJPY the pip value is in yen first: 0.01 × 100,000 = ¥1,000 per standard lot. To turn that into dollars, divide by the price. At 150.00, ¥1,000 ÷ 150 = about $6.67 per pip. So a 40-pip move on 1 standard lot is worth about $267. Because the conversion uses the current price, the dollar value of a yen pip changes slightly as USDJPY moves.
How do pips work on gold (XAUUSD)?
Gold has no single pip convention. Many platforms quote XAUUSD to two decimals and treat $0.01 or $0.10 as the smallest step, and traders often talk about gold in dollars rather than pips. The safer habit is to think in price: on a common contract of 100 ounces per lot, a $1.00 move in gold is worth about $100 per standard lot. Always check the contract size in your platform's symbol specification before you size a gold trade. Our guide to the best prop firm for gold (XAUUSD) covers the gold-specific rules.
How do you turn pips into risk per trade?
This is where pips become useful. Instead of picking a lot size first, decide how much you are willing to lose, measure the stop in pips, then work out the size:
Position size (lots) = money at risk ÷ (stop in pips × pip value per lot)
Worked example: sizing a trade (illustrative)
- Risk. On a $100,000 simulated account you decide to risk 0.5% per trade, which is $500.
- Stop. Your setup on EURUSD needs a 20-pip stop loss.
- Size. $500 ÷ (20 pips × $10) = 2.5 lots.
- Check. If the stop is hit, the loss is about $500 plus costs. If you widened the stop to 40 pips, the same $500 risk would allow only 1.25 lots.
Our lot size calculator does this for any pair, and lot sizing on a $100K prop firm account walks through more examples.
How do pips matter under prop firm rules?
In an evaluation, the rules are written as percentages of the account, not pips, so you have to convert one into the other before every trade.
- Daily loss limit. Each Alpha Capital plan has a daily loss limit, for example 3% on Alpha Pro 6% and 5% on Alpha Swing (daily risk limits). On a $100,000 account, 3% is $3,000. At 2 standard lots of EURUSD, that is 150 pips of combined losses in a day.
- Max risk per asset. On Qualified Accounts bought since 21 July 2026, open losses on any one instrument are capped, for example at 2% on a $100,000 account (max risk rule). Knowing your pip value tells you how many pips of floating loss that is.
- Spread and slippage. Costs are measured in pips too. A 0.6-pip spread on 2 lots costs about $12 per round turn before commission, and spreads can widen around news.
Thinking in pips and money at the same time keeps every trade inside the limits, however volatile the pair.
Frequently asked questions
How many pips is 1.0000 to 1.0100?
100 pips. On a standard EURUSD-style pair, each 0.0001 is one pip, so a move of 0.0100 is 100 pips.
Is a pip the same as a point?
Not always. Many platforms use "point" for the smallest price step, which on a five-digit quote is a pipette, one tenth of a pip. Check whether your platform shows points or pips before you set a stop.
Why are yen pairs different?
The yen has a much lower value per unit than most currencies, so yen pairs are quoted with fewer decimals. One pip on USDJPY is therefore 0.01 instead of 0.0001.
How much is 1 pip worth on a micro lot?
On EURUSD and other pairs quoted in US dollars, about $0.10. On other pairs it depends on the exchange rate into your account currency.
Do pips apply to indices and crypto?
Not in the same way. Indices and crypto are usually measured in points or price units, and the value per point depends on the contract size. Check the symbol specification on your platform.
Sources
- Alpha Capital help centre: daily risk limits
- Alpha Capital help centre: max risk rule
- What is forex trading? A beginner's guide
Alpha Capital Group is a proprietary trading firm based in the United Kingdom. Accounts operate in a simulated environment with simulated funds. Performance fees are performance-based and outcomes are not guaranteed.
