Calculating Pip Values - Lesson 3

A "pip" is the smallest increment in any forex pair. For pairs quoted in 5 decimal points a pip increment is based on the fourth decimal. For pairs quoted in 3 decimal points a pip increment is based on the second decimal.

• 5 Decimal - 0.00010
• 3 Decimal - 0.010

For example a movement in EURUSD from 1.48385 to 1.48395 is a 1 pip move. In USDJPY, a movement from 83.293 to 89.283 is 1 pip. The value of a pip is determined by the currency of your account and the pair you are trading.

If the Quote currency is the same as your account currency then a 1 pip move equals 10 account currency units per 100,000 traded.

If the Base currency is the same as your account currency then you must also factor in the spot rate.