Pip calculatorA pip calculator is a crucial risk management tool for any forex trader. The value of a pip—the fourth decimal place in forex pairs (second decimal place in JPY pairs)—varies based on account currency, the pair you’re trading, and exchange rates.I was recently working with a trading student who kept having wins and losses that were quite different than expected. They planned out their trade, calculated their risk—1% of their account for example—but on a losing trade they would end up losing 1.5% or 0.4%.Winning trades were supposed to be 2.5%, but they ended up being 1.5% or 4%. Something was off. They weren’t factoring in pip value. When she did, her profits began aligning with the expectations of the system she was trading.There is a common myth when it comes to pip value. Lots of sources say a pip is $10 with a standard lot. This is only true in a specific context. It may not be $10 for your account currency or the pair you’re trading.You may be starting to see that pip values can get a little complicated. I’ll show you how to make sense of it. But first, understand that a pip calculator is your best friend. You don’t need to really know anything about pip values except that they can vary, and if ever in doubt just use a pip calculator!How To Use The CalculatorOur pip calculator has four input fields. Once those fields are filled in, the pip value will appear in the bottom box. Follow these steps to calculate the pip value on your trade.1. Enter a pip amount. If you want to know the value of a single pip, input 1. If you want to know the value of a multiple pips (such as your stop loss or target size) input 5, or 10, or 12.5.2. Enter the forex pair (or CFD) you want to know the pip value for. Start typing it and then select it from the drop down menu.3. Enter the position size you’re interested in taking. Or input 1,000 to see the pip value of a micro lot, 10,000 for the pip value of a mini lot, or 100,000 for the pip value of a standard lot.4. Choose your account currency. When you open a broker account you select whether your account will be based in USD, EUR, JPY, GBP, etc. If unsure, you can check the balance in your account. It will state the balance currency: 3725 USD or 5978 EUR, for example.Understanding the Pip Calculator and ExamplesI mentioned there’s a common myth that a pip is always $10 on a standard lot. That’s not quite accurate. That pip value is in $, and some people may not even trade USD pairs, or have a USD account. Punch into the calculator:1 = Pip amountEUR/USD = instrument100,000 = Position sizeUSD = Account currencyYou will get a pip value of $10. That means that if you have a 100,000position (a standard lot) , each time the price moves a pip up or down you will make or lose $10. If you input 10,000 (mini lot) for the position size, you will get a pip value of $1.If the position is 1,000 (micro lot), the pip value is $0.1. With a 1,000 position each pip of movement results in a loss or gain of $0.1. You could also use the pip calculator to find the potential gain or loss on a trade you’re considering.Assume you want to buy the EUR/USD in a USD account with an entry of 1.0510 and a stop loss at 1.0499 (11 pips). You are going to trade 75,000 units (see the position size calculator to calculate ideal position size for your account size and trade parameters).Since the answer is $82.5, you now know what your risk is on the trade. You could do the same thing to figure out your profit by inputting how many pips your profit target is from your entry (first box).Pip Values When USD Isn’t the Quote CurrencyHere is a general rule for pip values: When your account currency is the same as the quote currency, the pip value is 10 in whatever that currency is. The “quote currency” is the second pair listed in a pair. If you are trading the USD/AUD and your account is AUD, the pip value is AUD10 (NOT USD) for a standard lot (100,000 units).When our account currency is different than the quote currency in the pair, 10 in the quote currency needs to be converted to our own account currency. This means the pip value will be different than 10. For example, if you are trading the EUR/USD, but have a Canadian dollar account, a pip in the EUR/USD is not CAD10.The EURUSD still has a pip value of USD10, but because the trading account is Canadian the pip value needs to be convered to CAD. If the USD/CAD exchange rate is 1.354. Multiply that by 10 and you get the pip value in Canadian dollars: 13.54 CAD for a standard lot.If it’s a little confusing, don’t worry. Remember, the calculator does the work for you. This extra information is just to help you understand how it works. Try using other account currencies and pairs in the calculator and see how it affects the pip value.Why is the Pip Calculator and Pip Value Important?Pip value affects our profits and losses. Therefore, knowing the pip value is crucial for risk management. Use the pip calculator anytime you don’t know the pip value. Unless your account currency is the same as the second currency in the pair, the pip value can change over time, so always calculate the pip value for those trades.I like to risk a fixed percentage of my account on each trade, such as 1%. Using this, and parameters of the trade I am considering, I can get my ideal position size for that trade. But I need to know the pip value. Assume you have a €8,500 (EUR) account and are trading the EURUSD. You are willing to risk 1% of your account and you are considering a trade with a 15 pip stop loss (different between entry and stop loss price).Here’s how you calculate your position size:Position size = $ Account Risk / $ Trade Risk$ Account risk = 1% of €8,500 = €85$ Trade Risk = 15 pips x pip value = 15 x €9.35 = €140.25 (use the calculator to see pip value based on current exchange rate)Therefore:Position size = €85 / €140.25 = 0.6 standard lotsWe know the position size is standard lots because the pip value used in the Trade Risk calculation was for a standard lot. As the exchange range between the EUR/USD fluctuates, so will the pip value. So calculating the pip value using the calculator is crucial for proper position sizing in this case (EUR account).FAQsHow to calculate the pip value of a micro lot?For non-JPY pairs, the pip value is 0.1 for a micro lot in the currency listed second in the pair (quote currency). If your account is not denominated in that currency, you need to use the current exchange rate between your account currency and the quote currency to get the value of a micro lot in our account currency. You can also use the pip calculator.For JPY pairs, the process is the same, except the pip value is ¥10 for a micro lot when JPY is the quote currency. If you don’t have a JPY trading account, you will need to convert to this your own account currency using the current JPY and your-account-currency exchange rate.How do I calculate my profit using a pip calculator?You will need to know how many pips your profit is, the instrument traded, the position size, and your account currency. Input these into a pip calculator to see your total profit. The profit will include the pip value in its calculation.US30 pip calculator – What is a pip in US30?The US30 is a popular CFD based on the Dow Jones Industrial Index. The second decimal place has a pip value of $0.01 on one CFD contract with most CFD brokers. Yet because the US30 trades above 30,000 most trades care about points, which is the number before the decimal.Each point is worth $1 (100 pips). The US30 regularly moves 300 points in a day, and can move well over 500 on volatile days. If the bid price of the US30 is 32,891.37 then 7 is the pip and 1 is the point.Gold pip calculator – What is a pip in a gold CFD?The second decimal place has a pip value of $0.01 on a gold CFD. If trading one CFD contract a move from 1,819.06 to 1,819.07 would represent a $0.01 gain or loss with most CFD brokers. Most gold CFD traders think in terms of points (100 pips, or the number in front of the decimal). Gold often moves 20 to 40 points a day, which is 2,000 to 4,000 pips.Nas100 pip calculator – what is a pip in a Nas100 CFD?NAS100, also called the US100, is a popular CFD based on the Nasdaq 100 index. The second decimal place has a pip value of $0.01 with most CFD brokers. Most traders think in points with this product. A point is 100 pips and is the numbers in front of the decimal. The NAS100 routinely moves over 200 points per day, which is more than 20,000 pips.