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Pip value

The money a one-pip move is worth on your position, set by trade size, the quote currency, and the rate used to convert into your account currency.

The base formula is pip value = pip size x units traded, expressed in the quote-currency. For most pairs the pip size is 0.0001; for yen pairs it is 0.01. Trading 100,000 units of EUR/USD gives 0.0001 x 100,000 = $10 per pip, and because the quote currency is already dollars, a dollar account needs no conversion.

When the quote currency is not your account-currency, divide or multiply by the relevant rate. See pip-value-cross-pair for the awkward cases.

Example: 50,000 units of USD/JPY with USD/JPY at 151.90. Pip value = 0.01 x 50,000 = JPY 500. Converted at 151.90, that is USD 3.29 per pip, so a 30-pip stop risks about $98.

Related: pip-value-cross-pair, nano-lot

See it drawn

Original diagrams for the ideas on this page. Illustrative, not real market data.

How a position size is worked outAccount size, risk per trade and stop distance feed into one box giving the number of shares.ACCOUNT SIZE$25,000your capitalRISK PER TRADE1%of the accountSTOP DISTANCE$0.50entry to stopPOSITION SIZE500 sharesrisk budget: $25,000 × 1% = $250position size: $250 ÷ $0.50 = 500 shares
Working out a position size. Three numbers decide how big a trade is: the account, the share of it put at risk, and the distance from entry to stop. One percent of $25,000 is a $250 budget, and a $0.50 stop divides into that 500 times.

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