Direct answer: how to calculate pips in forex
To calculate pips in forex, you convert a price difference (the move in the exchange rate) into “pip units” using the pip size for that currency pair.
A common formula is:
- Pips = (Price change) ÷ (Pip size)
Then Price change is simply Exit price − Entry price (or the reverse if you measure differently). The key is identifying the correct pip size for the pair and quote format.
Explanation: pip versus points (and what inputs you need)
In practice, “pip” and “point” are related but not always identical.
- A pip is a standardized unit representing a typical small price movement used in FX quoting.
- A point is usually a one-tick movement in the platform’s price display.
- Because brokers and platforms can quote with different decimal places, one platform’s point may not equal one pip.
Determining pip size
The pip size depends on how the pair is quoted:
- Many non-JPY pairs are quoted with 4 decimal places, where the pip size is often 0.0001.
- Many JPY pairs are quoted with 2 decimal places, where the pip size is often 0.01.
Some feeds may use additional decimals (e.g., 5-digit or 3-digit pricing). In those cases, the pip size may still be the same “one pip equals 10 points” idea, but you must confirm the pip convention your quote uses.
Converting a price move into pips
- Identify entry price and exit price (same quote direction and same number of decimals).
- Compute absolute or signed price change:
- Signed: exit − entry
- Absolute magnitude: |exit − entry|
- Divide by the pip size:
- Pips = (exit − entry) ÷ pip_size
Example and quick checks
Example (non-JPY, common 0.0001 pip size)
If a pair is quoted like 1.12345 and the move is from 1.1234 to 1.1240:
- Price change = 1.1240 − 1.1234 = 0.0006
- If pip size is 0.0001, then pips = 0.0006 ÷ 0.0001 = 6 pips
Example (JPY, common 0.01 pip size)
If a JPY pair moves from 145.20 to 145.35:
- Price change = 145.35 − 145.20 = 0.15
- If pip size is 0.01, then pips = 0.15 ÷ 0.01 = 15 pips
Checks that reduce mistakes
- Use the same decimal precision for entry and exit as shown by your platform.
- Confirm the pip size setting/convention (or the pip definition) on your pricing feed.
- If your platform shows extra digits, verify how many “points” make one “pip.”
Relevant limitations and risks (including uncertainty)
- Conventions vary: Not every broker/platform uses the same pip size mapping to displayed decimals, especially with fractional pricing.
- Quote format matters: The pip calculation assumes you use the correct pip size for the specific pair and the specific quoting precision.
- No performance inference: Calculating pips describes a historical price move in units; it does not indicate future outcomes.
- No personal circumstances assumed: Position sizing, leverage, and contract specifications affect monetary results, but they are separate from the pure “pips” unit calculation.
If you want, provide a specific currency pair and the exact displayed entry/exit prices (including decimals), and you can calculate pips with the appropriate pip size for that quote format.