EducationFoundations~12 min readUpdated 26 September 2026
The short answer
A pip is the smallest standardized price move in a currency pair. On most forex pairs it is the fourth decimal place (0.0001). On JPY pairs it is the second decimal place (0.01). On gold it is the second decimal place ($0.01). On indices, the unit is a point, not a pip. One pip on EURUSD at one standard lot is worth $10. Everything else — stop distance, position size, profit and loss — is measured in these units.
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Written by the Trade To The Top team|Reviewed 26 September 2026
Lessons checked against the platform specifications of IC Markets, Pepperstone, and FP Markets.
A pip is the unit every other number on this site is measured in. Your stop distance is in pips. Your position size is calculated from pips. Your R-multiples, your spread cost, your profit and loss — all pips. If you do not know exactly what a pip is, none of the rest makes sense.
Key takeaways
On most forex pairs, a pip is 0.0001 — the fourth decimal place. On JPY pairs, a pip is 0.01.
On gold, a pip is $0.01 — the second decimal place. It is 100× bigger than a EURUSD pip in raw decimal terms.
On indices, the unit is a point, not a pip. One point is usually a 1.00 move in the index price.
On crypto, the unit is broker-defined. It can be $0.01 or $1.00 depending on the exchange or broker.
The fifth decimal on forex is a pipette. On gold, a 3rd decimal would be one. In MT5, 1 pip equals 10 points.
A pip's value in your account currency depends on the pair, the instrument, and the lot size. $10 per pip is only true on USD-quoted forex pairs at 1 standard lot.
No prerequisites
This is lesson 01 of the Foundations group. Start here.
What a pip actually is
On most currency pairs, a pip is 0.0001 — the fourth decimal place. EURUSD moving from 1.0850 to 1.0851 is one pip. GBPUSD from 1.2650 to 1.2651 is one pip. AUDUSD, NZDUSD, USDCHF, USDCAD — same: fourth decimal.
Two 10-pip 1-minute candles. The gold slice at the top of each is exactly one pip — 1.0860 to 1.0859 on EURUSD, and 145.50 to 145.49 on USDJPY. Same distance, different decimal place.
There is one exception. JPY pairs are quoted to two decimal places, not four. USDJPY moving from 145.50 to 145.51 is one pip. Same name, same concept, different size — because the yen has a different scale.
EURUSD
1.0850
↓
1.0851
1 pip = 4th decimal
USDJPY
145.50
↓
145.51
1 pip = 2nd decimal
Pair type
Example quote
1 unit sits at
What it's called
Most forex majors
EURUSD 1.0850
4th decimal (0.0001)
Pip
JPY pairs
USDJPY 145.50
2nd decimal (0.01)
Pip
Gold (XAUUSD)
2650.10
2nd decimal ($0.01)
Pip (or point)
Indices (US500)
5900.4
1.00 index point
Point (never pip)
Crypto (BTCUSD)
63000.00
Broker-defined
Point (or pip)
That is the whole definition. It is the smallest move the broker cares about. Everything else — the spread you pay, the stop you set, the target you reach for — is measured in multiples of that one number.
ONE PIP · TO SCALE AGAINST A FULL RANGE
EURUSD 4H · the gold band is 0.0001 · the blue band is the whole move
A pip is not a move you can see. It is the unit the move is counted in.
Pip, pipette, and point
The confusion starts when a broker shows a fifth decimal. EURUSD quoted as 1.08501 instead of 1.0850. That extra digit is not a pip. It is a pipette — one tenth of a pip. Some brokers call it a fractional pip. On an MT5 ticket, the fifth decimal is the pipette.
Pip
1.0850
4th decimal = 0.0001
Pipette
1.08501
5th decimal = 0.00001
Point
Same position as pipette in MT5
1 pip = 10 points
A point is a different thing again. In MT5, a point is the smallest movement the platform will display — which on a five-decimal EURUSD quote is the fifth decimal, meaning 1 pip equals 10 points. If a broker says "the spread is 8 points," that is 0.8 pips.
If you read "20 point stop" and think pips, your risk calculation is wrong by a factor of 10.
This is the single most common arithmetic mistake beginners make, and it is why the lot size calculator asks you to specify which unit you are using before it computes anything.
Why pips aren't the same size on every pair
A pip is always a fixed decimal move — 0.0001 on EURUSD, 0.01 on USDJPY. But what that pip is worth in your account currency depends on the pair.
One pip on USDJPY at 1 standard lot equals about $6.85 — because the pip is denominated in yen and has to be converted back to dollars.
One pip on GBPJPY at 1 standard lot is a different number again.
The formula is: pip value = (pip size / exchange rate) × lot size. On USD-quoted pairs the exchange rate is 1, so it is simple. On everything else, the pip value moves with the market.
Same pip count, same lot size, different real risk
EURUSD · 20-pip stop · 1 standard lot
$200
20 pips × $10.00 per pip
USDJPY · 20-pip stop · 1 standard lot
$137
20 pips × ~$6.85 per pip
The pip count is identical. The dollar risk is not. This is why we never publish a lot size on a signal — the size has to be calculated from your account and the specific instrument, every time.
Common mistake
Assuming every pip is worth $10. It isn't. $10 per pip is only true on USD-quoted forex pairs (EURUSD, GBPUSD, AUDUSD, NZDUSD) at 1 standard lot. On USDJPY a pip is worth roughly $6.85. On gold, a pip is worth $1 per standard lot — not $10. On US500, a point is worth whatever your broker's contract size says. Always calculate pip value per instrument — never carry a rule of thumb from one pair to the next.
FIFTY PIPS · THREE INSTRUMENTS
EURUSD · USDJPY · XAUUSD — the same pip count, three different price distances
Fifty pips is 0.0050 on EURUSD, 0.50 on USDJPY and 5.00 on gold. The pip count travels; the price distance does not.
Pips on gold, indices, and crypto
Here is where it breaks. "Pip" is a forex convention, and it does not translate cleanly to anything else. The instruments most signal-followers trade alongside forex — gold, index CFDs, and crypto — use different unit sizes entirely, and one of them does not use the word "pip" at all.
Gold (XAUUSD)
Gold operates on a two-decimal price structure. On XAUUSD, one pip equals a price movement of $0.01. A move from 2650.00 to 2650.01 is exactly one pip. Applying the standard forex pip size (0.0001) to gold gives the wrong answer by a factor of 100.
Standard quote: 2650.10 (2 decimals). The last digit is the pip.
Pip value: a standard lot is 100 troy ounces. One pip = $0.01 × 100 oz = $1 per pip. A mini lot (10 oz) = $0.10 per pip. A micro lot (1 oz) = $0.01 per pip.
Some brokers use 3 decimals. If your platform shows 2650.101, the third decimal is a pipette — one tenth of a pip, same concept as the fifth decimal on forex.
Some brokers use 1 decimal. If your platform shows 2650.1, one pip is $0.10 — ten times bigger than the 2-decimal standard.
Indices (US500, US30, NDX)
Indices do not use pips at all. The unit is a point — one full index point. US500 moving from 5900.0 to 5901.0 is one point. The word "pip" does not apply, and any source that talks about "pips on the S&P" is using a shorthand that hides what the unit actually is.
Point value depends on the broker's contract size. On a typical US500 CFD with a 1-lot contract size of 1, one point = $1 per contract. Other brokers use different contract sizes — IG, for example, quotes "one pip means one index point, value of one pip USD 250" on its futures product, which is a completely different contract.
Some brokers use fractional pips. FXCM's SPX500 CFD defines 1 pip as a 0.1-point move, not 1 point — which means "10 pips" on that platform is 1 actual index point, not 10.
Always check the Symbol Specification panel in MT5. "Digits" tells you the decimal places. "Contract size" tells you the point value. Between them, you can work out what "1 pip" means on your specific account.
Crypto (BTCUSD, ETHUSD)
Crypto CFDs are entirely broker-defined. A 1-unit move on BTCUSD at one broker might be $1, at another $0.10, and at a third $0.01. There is no industry convention. Before you size any crypto trade, open the Symbol Specification and confirm the tick size and contract size. This is not a formality — getting it wrong is a 100× sizing error.
Two 10-unit 1-minute candles. On gold, the unit is $0.01 — 2650.10 to 2650.09. On US500, the unit is one index point — 5900.0 to 5899.0. Same visual shape, different decimal scale, and one of them is not called a pip at all.
Two crypto 10-unit candles. On a typical broker that shows BTCUSD with 2 decimals, one unit is $0.01. But this is not universal — many brokers use $1.00 or $0.10 instead. Always check the Symbol Specification panel before you size a crypto trade.
Check your broker — every time
Do not trust the word "pip" alone. Open MetaTrader 5, right-click any symbol, and select Specification. Two fields decide your sizing:
1. "Digits" — how many decimal places the platform shows. For a 2-decimal instrument like gold, that is 2650.10. For 3-decimal forex like EURUSD, that is 1.08501. Digits minus one equals the pip decimal place on most forex pairs, but the rule does not transfer to gold or indices.
2. "Contract size" — how many units one lot represents. On EURUSD, that is 100,000. On XAUUSD, typically 100 ounces. On US500 CFDs, often just 1. This number decides the dollar value of a pip. Different broker, different number — verify every time.
The word "pip" does not travel cleanly from forex to anything else. The number does not either.
Common mistake
Copying a "20-pip stop" from a forex signal onto a gold or index trade. Twenty pips on EURUSD is 0.0020. Twenty pips on gold is $0.20. Twenty points on US500 is 20 index points. Three completely different distances in price terms. If you use the same number across instruments without converting the unit, your position size will be wrong by 10× or 100×, and your stop will sit nowhere near where you think it is.
How pips turn into money
The pip itself is meaningless. What matters is what it costs when a trade goes wrong.
If your stop is 30 pips away and your position is 1 standard lot of EURUSD, you are risking $300 when the market hits that stop. If your account is $3,000, that is 10% of your account on one trade. If it is $30,000, it is 1%.
The two variables are stop distance in pips and position size in lots. Change either and the risk changes. The whole point of position sizing is choosing the lot size that makes the pip distance equal to a fixed percentage of your account.
That is the next lesson. This one exists so the next one has a unit to work in.
When this fails
The pip is a clean concept that gets messy in five places:
Brokers that quote in points, not pips. Some platforms never use the word pip. They will tell you a stop is in points or in ticks, and you have to know the conversion for your specific instrument. If you are not sure, open the MT5 Symbol Specification panel and look at "Digits." Digits minus one equals the pip decimal place on forex pairs.
Non-forex instruments. As above, pip is a forex convention. On gold, US500, and crypto the concept exists but the size is a broker decision. Always check the specification before sizing.
Pairs where the pip value moves. On USDJPY, the pip is worth roughly $6.85 per standard lot at 145. Change the rate to 150 and it is roughly $6.67. That is a three percent swing in your risk per trade, from the market moving, with no trade on.
Gold quoted to 1 decimal place. If your broker shows gold as 2650.1 instead of 2650.10, one pip is $0.10, not $0.01. That is a 10× difference in your risk calculation, from a display setting you may not have noticed.
Indices quoted with fractional pips. Some brokers (FXCM, for example) define 1 pip on SPX500 as a 0.1-point move, not 1 point. Ten "pips" on that platform equals 1 actual index point. If you read a stop as "100 pips" and assume 100 index points, you have sized the trade 10× too wide.
If you remember nothing else: the pip is the unit, the lot is the size, and the two together decide your risk. Not the other way around.
FORTY PIPS · WHAT IT IS WORTH
EURUSD 4H · the same move at micro, mini and standard lot size
Pips measure the move. Lot size turns the move into money.
Gold (XAUUSD): pip = $0.01 (2nd decimal). 100× bigger than a EURUSD pip in raw terms.
Indices: the unit is a point, not a pip. One point = a 1.00 move in the index price (broker-dependent).
Crypto: broker-defined. Check the spec before sizing.
On every instrument, pip value depends on lot size. $10 per pip is only true on USD-quoted forex pairs at 1 standard lot.
Try it now. Our free lot size calculator takes your balance, risk %, and stop distance in pips — and returns the exact lot size for any instrument we cover. No signup.
5 questions · immediate feedback · retake any time
Question 01 of 05
On EURUSD, how much is one pip?
Correct: B. On most currency pairs, one pip is 0.0001 — the fourth decimal place.
Question 02 of 05
On USDJPY, how much is one pip?
Correct: C. JPY pairs are quoted to two decimal places, not four.
Question 03 of 05
A broker shows EURUSD at 1.08501. What is that last digit?
Correct: B. The fifth decimal is a pipette. In MT5, this is also what the platform calls a "point." 1 pip equals 10 points.
Question 04 of 05
One pip on EURUSD at 1 standard lot equals:
Correct: B. 1 standard lot = 100,000 units. One pip = 0.0001. 100,000 × 0.0001 = $10.
Question 05 of 05
On XAUUSD (gold), one pip equals:
Correct: C. Gold is quoted to two decimal places. One pip = $0.01 (one cent). Some brokers quote gold to one decimal place, in which case one pip is $0.10 — always check your broker's spec.