Pip value: from quote movement to account P/L

A pip is a price-movement unit

For many non-JPY FX pairs, one pip is 0.0001. For JPY pairs it is conventionally 0.01. Five-decimal and three-decimal broker quotes often add a fractional pip, so “point” and “pip” are not always interchangeable.

Convert the price unit into cash

The basic relationship is pip value = position units × pip size, initially in the quote currency. For 100,000 EURUSD units, 100,000 × 0.0001 = 10 USD per pip.

Convert into the account currency when necessary

A GBPJPY pip is first valued in JPY. A USD account needs a JPY-to-USD conversion, so the USD pip value can change as the conversion rate changes even when the lot size stays constant.

Pip value feeds directly into position sizing

Once pip value per lot is known, lots = cash risk ÷ (stop pips × pip value). A pip-value error therefore becomes a position-size error.

Verification

Compare the pip value calculator with MT5 tick size/value and test the expected P/L of a one-pip move on a small hypothetical position.

Last reviewed: 2026-08-31