Pip Calculator: Calculate Pip Value for Smarter Trading

The foreign exchange market (Forex) is the largest and most liquid financial market in the world, with over $7.5 trillion traded daily.

Whether you’re an experienced trader or a beginner, understanding PIPs (Percentage in Point) is crucial. PIPs help measure price changes between currency pairs, making them an essential unit for calculating profits, losses, and overall risk in trading.

In this guide, we’ll explain what a PIP is, how to calculate it, why it matters, and how it applies to Irish traders. Want to calculate PIPs instantly? Use our free PIP Calculator to manage risk, optimise trades, and make smarter trading decisions.

What is a PIP in Forex?

A PIP (Percentage in Point) is the smallest possible price movement in most Forex trading platforms.

For most currency pairs, one PIP is equal to a movement in the fourth decimal place of an exchange rate.

For example

If the EUR/USD exchange rate moves from 1.0875 to 1.0895, that’s a 20 PIP increase.

Since currency prices fluctuate rapidly, PIPs provide a standardised way to measure changes, making it easier to track profits and losses.

Why Are PIPs Important in Forex Trading?

PIPs are essential for:

• Calculating Profits and Losses – PIPs determine how much you earn or lose on a trade.
• Managing Risk – Traders use PIPs to set stop-loss and take-profit levels.
• Understanding Spreads – Brokers charge fees through spreads, which are measured in PIPs.

What is a Forex Spread?

A spread is the difference between the buy price (bid) and sell price (ask) of a currency pair. This is how brokers make money instead of charging direct commissions.

For example

If the EUR/USD buy price is 1.2456 and the sell price is 1.2454, the spread is 0.0002 or 2 PIPs.

A lower spread means lower trading costs, making it easier to enter and exit trades profitably.

How Do PIPs Work with the Japanese Yen (JPY)?

Most currency pairs have four decimal places when measuring PIPs. However, Japanese Yen (JPY) pairs are an exception, as they use two decimal places instead.

For example

If the USD/JPY exchange rate moves from 132.50 to 132.75, that’s a 25 PIP movement.

What is Forex Pair Volatility?

Volatility refers to how much a currency pair moves in PIPs over a specific time. Some pairs move a lot in a short period (high volatility), while others move more slowly (low volatility).

Formula for Volatility:
Volatility = Highest Price - Lowest Price

For example

If GBP/EUR reaches a high of 1.1720 and a low of 1.1675, the daily volatility is:

1.1720 - 1.1675 = 45 PIPs

Highly volatile pairs can provide bigger profit opportunities but also carry higher risk.

Types of Forex Currency Pairs

Forex pairs are categorised into three main groups:

Major Pairs

These are the most traded currency pairs in the world and include the euro (EUR), US dollar (USD), British pound (GBP), and Japanese yen (JPY).

• EUR/USD ("Fiber") – The most traded pair worldwide, including in Ireland.
• GBP/USD ("Cable") – Popular among Irish traders due to close UK economic ties.
• USD/JPY ("Ninja") – Heavily influenced by global financial markets.
• USD/CHF ("Swissy") – Favoured for its stability during economic uncertainty.

Minor Pairs

These do not include the US dollar but involve other major global currencies (e.g., EUR/GBP, EUR/JPY, GBP/AUD).

Exotic Pairs

Less commonly traded, exotic pairs involve emerging market currencies such as EUR/ZAR (Euro/South African Rand) or USD/TRY (US Dollar/Turkish Lira). These pairs often have higher volatility and wider spreads.

How to Calculate the Value of a PIP in Forex

The value of a PIP depends on the currency pair, lot size, and exchange rate.

Formula for PIP Value:
PIP Value = (PIP Change × Lot Size) ÷ Exchange Rate

For example

If EUR/USD moves from 1.2001 to 1.2002 (1 PIP change):

Lot size = 100,000 units
Exchange rate = 1.2002

PIP Value = (0.0001 × 100,000) ÷ 1.2002 = €8.33

How to Use Our Forex PIP Calculator

Calculating PIPs manually can be time-consuming. That’s why we’ve built a free Forex PIP Calculator to help traders instantly determine their profit or loss per trade.

How It Works:

• Enter the number of PIPs moved
• Select the currency pair (e.g., EUR/GBP)
• Enter the trade size (lot size)
• Choose your deposit currency (EUR, USD, etc.)

Click "Calculate," and the tool will display the exact PIP value for your trade.

What's the Difference Between a PIP, Pipette, and Lot?

• PIP (Percentage in Point): The standard measurement for price changes in Forex.
• Pipette: A fraction of a PIP (1/10th of a PIP), used by brokers with five decimal places.
• Lot Size: The amount of currency traded.

Common Lot Sizes:

• Nano Lot = 100 units
• Micro Lot = 1,000 units
• Mini Lot = 10,000 units
• Standard Lot = 100,000 units

For example

If you trade 50,000 units, you’re using 5 mini lots.

How to Calculate Profit or Loss Using PIPs

Example of a Profitable Trade

You trade 3 standard lots of EUR/USD
Your trade closes 70 PIPs higher

PIP Value Calculation:

(0.0001 × 300,000) ÷ 1.1420 = €26.27 per PIP

Total Profit:
€26.27 × 70 PIPs = €1,839

Example of a Losing Trade

You trade 5 mini lots of GBP/USD
Your trade closes 70 PIPs lower

Total Loss:
€4.14 × 70 PIPs = €290

How PIPs Impact Your Trading Risk

While PIPs help measure market movements, trading with high leverage can magnify both profits and losses.

• Leverage Increases Risk – Higher leverage means larger position sizes, which increases your profit or loss per PIP movement.
• Market Volatility – Sudden price swings can result in rapid PIP movements, causing unexpected losses.
• Holding Overnight – Keeping positions open overnight may result in swap fees, impacting overall profitability.

Expert advice

Always use stop-loss orders to limit potential losses and avoid excessive leverage.

PIPs aren’t just technical measurements—they are the foundation of Forex trading. By understanding how PIPs work, traders can:

• Minimise risk
• Optimise profits
• Make smarter trading decisions

Want an easier way to calculate PIPs? Use our free PIP Calculator today and trade with confidence! 

P. Laurore

Finance expert

Co-founder of HelloSafe and holder of a Master's degree in finance, Pauline has recognised expertise in personal finance, which she uses to help users better understand and optimise their financial choices. At HelloSafe, Pauline plays a key role in designing clear, educational content on savings, investments and personal finance. Passionate about financial education, Pauline strives, with every piece of content she oversees, to provide reliable, transparent and unbiased information for independent and informed financial management. To this end, she has tested over 100 trading platforms to help internet users make the right choices.