CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Excess volatility increases risk further. Be cautious. Past performance is not an indication of future results.
Open an Exness account
From decimals to money

What is forex, arithmetically? A quote, and the sum that prices one decimal of it — Pakistan

The currency market is two names and a number: EUR/USD 1.1000 says one euro trades for 1.1000 dollars. Everything a beginner needs from that quote is one conversion — how much money one step of the last decimal is worth on the size being traded.

A pip is a fixed step of the quote — 0.0001 on most pairs, 0.01 on pairs quoted in yen. Its value in money is units × that step. Trade 0.01 lots of a currency pair and you hold 1,000 units, so one pip is 1,000 × 0.0001 = $0.10. A full lot is 100,000 units, so one pip is $10. That single multiplication is the whole bridge between a chart and a statement.

The conversion in three lines

  1. Read the step size for the pair

    Four decimals means a pip of 0.0001. A pair quoted in yen shows two, so its pip is 0.01. Platforms often print one extra digit beyond the pip; that last one is a point, and ten of them make a pip.

  2. Turn the size into units

    Lots × 100,000 for a currency pair. 0.01 lots is 1,000 units of the first currency named; 0.10 lots is 10,000. This multiplier belongs to the contract, not to the account.

  3. Multiply, then convert if needed

    Units × step gives money in the second currency of the pair. When that currency is the one your account is kept in, the sum is finished. When it is not, the platform converts the result at the current rate, and the figure moves slightly during the day for that reason alone.

The same pair, three sizes

Only the middle column is typed in. The rest is one multiplication repeated.

SizeUnits heldOne pip is worth
0.01 lots1,000$0.10
0.10 lots10,000$1.00
1.00 lot100,000$10.00

Twenty pips against a 0.01-lot position is two dollars; the same twenty pips on a full lot is two hundred. Nothing in that comparison is about skill or about the market — it is the size, multiplied. Which is why sizing comes before entry on the order of operations.

Where the second currency quietly changes the answer

The pip value lands in the currency on the right of the pair. On a dollar-quoted pair with a dollar account, that is the end of it. On a pair whose right-hand currency is something else, the platform converts, and two effects follow: the pip value is not a round number, and it drifts as that exchange rate moves. Neither is an error. Both are reasons to read the figure off the ticket rather than from memory — the constants page says where.

A payment converted on the way into an account works the same way: an amount sent in one currency arrives as an amount in the account's currency, at the provider's rate. The trading arithmetic starts after that conversion, from whatever number actually landed.

What the pip value does not tell you

  • How far the price will move. It prices a step; it does not forecast one.
  • What the trade costs to open. That is the spread in pips × this same figure, plus any commission the account carries.
  • Whether the size is sensible. A pip value of $10 is perfectly correct on a balance far too small to carry it.
  • What happens overnight. A position kept open past the daily rollover meets a separate charge, quoted per symbol and side.
Why is a pip 0.01 on some pairs and 0.0001 on others?

Because the quote has fewer decimals. Pairs quoted in yen carry two, so their fixed step is 0.01.

The platform shows five digits. Which one is the pip?

The fourth. The fifth is a point, and ten points make one pip — a common source of a tenfold error.

Does the pip value depend on the price of the pair?

On a pair quoted in your account currency, no — units × step is enough. Where a conversion is needed, the rate used does move it.

Is the pip value different on a cent account?

The arithmetic is identical; the units are smaller, so the printed figure is smaller in the same proportion. The constants page covers it.

How do I check my figure without doing sums?

Open a ticket at the size you plan, note the running result, then close it: the change per pip is visible directly. A free demo does this for nothing.

Does the market ever close?

Currency trading runs around the clock on weekdays, which is why an overnight line exists at all — positions can be carried from one session into the next.

How small can a real position be?

0.01 lots is the smallest a Standard account accepts, which puts one pip at about ten cents on a dollar-quoted pair.

Do these figures work the same on metals or indices?

The method does; the constants do not. Units in a lot and the step size are set per symbol — see contract size.

Where this multiplication is used next

Counting the pips

Measuring a distance between two prices before pricing it.

Read a chart

Dividing by it

An accepted loss ÷ (distance × pip value) is the size.

Open the calculator

Different contracts

Why the 100,000 multiplier is not universal.

See the contract

Watch one pip move on a live quote, with virtual money.

A free demo prices the same pip on the same pair, with nothing to send and no time limit.

Open a free demo at Exness