Definition of a Pip

By default, all results on this website are displayed in pips. A pip is the smallest change of a currency pair rate.

Now that there are so many currency pairs, different instruments, software applications and brokers, the definition of a pip and its value may be different. However, Signalator uses its classic definition of a pip to represent the results of trading.

Key Example

We will use EUR/USD to illustrate the difference between pips and pipettes (fractional pips).

  • 4-digit quote: 1.2353 → the smallest displayed move is 0.0001 (this is 1 pip)
  • 5-digit quote: 1.23530 → the smallest displayed move is 0.00001 (this is a pipette, i.e., 1/10 of a pip)

Important: A pip for most non-JPY FX pairs remains 0.0001 regardless of whether your broker shows 4 or 5 digits. The extra digit simply adds precision (pipettes).

General Rule (USD account): On currency pairs quoted as XXX/USD (e.g. EUR/USD), 1 pip is approximately $10 per pip at 1.00 lot, which means 0.10 lots ≈ $1 per pip. For cross pairs and non-USD accounts, pip value depends on conversion.

How to Calculate the Value of a Pip

The value of a pip is based on two things: the currency pair you trade with and the currency your account is nominated in. Signalator here and throughout the whole website uses account details nominated in USD.

For XXX/USD Currency Pairs

To calculate a value of a pip, we have to understand what a pip is in terms of real money. Any currency rate is a ratio of one currency's value to another. For example, 1.6357 GBP/USD means 1 Great Britain Pound (GBP) equals 1.6357 United States Dollars (USD).

Practical Example: GBP/USD

Trade: Buy GBP/USD at 1.6437 with 1.0 standard lot (100,000 units)

Close: Sell at 1.6489

Profit in pips: 1.6489 - 1.6437 = 0.0052 or 52 pips

Profit in USD: 52 pips × $10 per pip = $520

If you had opened only 0.1 lot the profit would have been only $52.

For USD/XXX Currency Pairs

If you trade instruments like USD/CHF or USD/CAD, your trading is based on the USD and you buy/sell the USD. The calculation is similar but uses the inverse of the exchange rate.

Practical Example: USD/CHF

Pair: USD/CHF

Rate: 0.8774

Position size: 1.00 lot = 100,000 USD (base currency)

Pip size: 0.0001 CHF

Pip value (USD):

(0.0001 / 0.8774) × 100,000 ≈ $11.40 per pip

29 pips profit: ≈ $330.60

For USD/XXX pairs, pip value depends on the exchange rate. Exact values can vary slightly due to broker/platform rounding.

Understanding Inconsistent Results

You may face a situation when the overall profit in pips is negative but you actually received a net profit in terms of money and percentage to a deposit. The vice versa situation may also happen. This is absolutely normal when trading multiple currency pairs with different pip values.

Real Trading Scenario

Imagine these results trading 0.1 lot on each pair:

  • USD/CHF: +75 pips × $1.1386 per pip = +$85.39
  • USD/CAD: -95 pips × $0.7569 per pip = -$71.91
  • XAU/USD: +65 pips × $1.00 per pip (at 0.10 lots; on this site 1 pip = $0.10 price move) = +$65.00
  • USD/JPY: -80 pips × $0.7162 per pip = -$57.29

Final Result: -35 pips but +$21.19 USD profit.

This happens because each currency pair has a different pip value in USD terms.

Key Takeaways

  • A pip is the smallest standardized price movement in a currency pair
  • Standard pip = 0.0001 for most pairs (0.01 for JPY pairs)
  • Pip value varies by currency pair and lot size
  • When trading multiple pairs, net pips and net dollar profit can differ
  • Always calculate pip value specific to your traded pair and position size