Direct answer: price per pip
Price per pip in forex is the account-value change you expect from a one-pip move in an exchange rate, expressed in your account currency. To calculate it, you combine (1) the pip size for the instrument, (2) your trade size (contract size), and (3) any currency conversion needed when your account currency differs from the pair’s quote currency.
Explanation: inputs and the core logic
A “pip” is a standardized unit for quoted price movement. In many retail forex markets, the pip size depends on whether the quote currency is JPY:
- For pairs quoted to 4 decimal places (for example, EUR/USD), 1 pip is often 0.0001.
- For JPY pairs (for example, USD/JPY), 1 pip is often 0.01.
Note the limitation: pip conventions can differ by broker and instrument, so your platform’s specification for the pip size is the most direct verification.
To calculate price per pip, use this general idea:
- Find the pip size (ΔP) in price terms (e.g., 0.0001 or 0.01).
- Determine how much “price” the contract controls (contract size). In many common setups, 1 standard lot is 100,000 units of the base currency, but always align with your broker’s contract specification.
- Compute the pip value in the pair’s quote currency.
- If your account currency is not the quote currency, convert that pip value into your account currency using the relevant exchange rate (conversion rate at the time you evaluate the pip value).
Because different quote formats exist, there are multiple equivalent calculation paths. A common approach uses the relationship between pip size and contract notional.
Example and checks (conceptual, not account-specific)
Example setup (EUR/USD-style)
Assume a pair behaves like EUR/USD where 1 pip is typically 0.0001, and assume a “standard lot” controls 100,000 units of the base currency. Then a one-pip move changes the quoted price by 0.0001. The notional exposure is 100,000 units of the base currency, so the quote-currency amount associated with that price move is:
- Pip value (in quote currency) ≈ 100,000 × 0.0001 = 10
This result means: for a 1-lot position, one pip corresponds to about 10 units of the quote currency (EUR/USD quote currency is USD). If you use a different lot size, scale proportionally.
Example setup (JPY-style)
For a JPY pair where 1 pip is typically 0.01, the same logic applies: pip value (in quote currency) is roughly contract size × pip size, then converted if needed.
Practical checks
- Platform check: locate the pip size and pip value details in your trading platform or instrument settings. Then verify the behavior by observing that a one-pip price move produces the expected value change for the same position size.
- Scaling check: double the lot size and the pip value should double (assuming the same conversion logic and the same pip definition).
Limitations and what you should verify
- Pip size is not universal. Even if 0.0001 (non-JPY) and 0.01 (JPY) are common conventions, confirm the exact pip increment your specific instrument uses.
- Contract size varies by broker and account type. The “lot” definition and contract specification must match the calculation.
- Account currency conversion may be required. If your account currency differs from the pair’s quote currency, the pip value depends on the conversion rate used to translate the quote-currency pip amount.
- Values may be affected by how your broker calculates profits (for example, spread handling, margin model, and execution details). These affect realized results, even when the theoretical pip-value math is correct.