What it is — Pip Value
Pip value is how much money one pip of movement adds to or subtracts from your position. On a standard lot of EURUSD, one pip is worth about $10. On a mini lot it is about $1, on a micro lot about $0.10. The number is fixed per lot for most USD-quoted pairs, and it moves for everything else. It is the bridge between a chart distance and a cash outcome.
Why it matters — Pip Value
Stop losses and profit targets are written in pips, but your account only understands money. Pip value translates one into the other. A 20-pip stop on a pair worth $10 a pip risks $200 on one standard lot; the same stop on a pair worth $6 a pip risks $120. Traders who skip this step size two trades identically and risk two very different amounts.
One worked example
You buy two standard lots of USDCHF with a 25-pip stop. One pip on one lot is worth 10 CHF, so two lots move 20 CHF per pip. Converted at an exchange rate near 0.88, that is roughly $17.60 per pip. Your 25-pip stop risks about $440, not the $500 you assumed from a USD-quoted pair. The gap is small on one trade and permanent across a year of them.
Where it misleads
Pip value is not risk. It only tells you the worth of one pip — your stop distance decides the damage. It also drifts on non-USD quote currencies as the exchange rate moves, so yesterday's shortcut is only an approximation today. Finally, on a cross like EURCAD the dollar value per pip floats even while the trade is open. Plan risk in cash first, then convert to lots.
Frequently asked questions — Pip Value
Does pip value change during a trade?
On USD-quoted pairs it is stable. On pairs quoted in other currencies it drifts with the exchange rate, so recalculate for large positions or long holds.
Is pip value the same for every broker?
For a given pair and lot size, yes on standard contracts. Contract size differences on exotic or CFD instruments are the exception — check the symbol specifications.
Related terms — Pip Value
Related tools — Pip Value
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