Pip Value definition

The pip value can be either variable or fixed, depending on the currency pair it refers to and the base currency (i.e. measuring currency) of your account. The pip value is also a function of the amount traded.

The simplest way to calculate the pip value is to divide 1 pip by the exchange rate and multiply it by the lot size. This gives you the pip value in terms of the quoted currency. If the base currency of your account is other than the quoted currency, then simply multiply this by the applicable exchange rate.

For example: What is the pip value of a trade in GBP/JPY with a price of 128.92? The pip value of 1 standard lot (5,000) of GBP/JPY which is traded at 128.92 is:

0.01/128.92 = 0.00007756 GBP

0.00007756 x 5,000=0.387 GBP

The base currency of your account is USD. If the exchange rate for GBP/USD is 2.0612, then the pip value for 1 standard lot in terms of the account's base currency is: 0.387x 2.0612 = $0.80.

Related words

PIPPositionProfit/Loss (P&L)PeggingPurchasing Power ParityPip ValuePrice / Cash Flow