What a pip is worth in money
What you learn in 3 minutesA pip is the smallest standard step in a price. On EUR/USD, one pip is a move of 0.0001, so a chart price of 1.0850 becomes 1.0851 when it rises one pip. In money, a pip is worth a fixed amount per lot, and that amount changes with the pair and the lot size. This lesson works out what twenty pips pays on a 0.10 lot EUR/USD trade, in pesos.
Twenty pips on 0.10 lots of EUR/USD
| Step | Amount | Note |
|---|---|---|
| Pip size on EUR/USD | 0.0001 | The standard smallest price step for this pair. |
| One standard lot | 100,000 units of EUR | The contract size the pip value is based on. |
| Pip value on one standard lot | 10 units of the quote currency | 100,000 x 0.0001 = 10. For EUR/USD the quote currency is USD, so this is 10 USD before conversion. |
| Lot size used here | 0.10 lots | One tenth of a standard lot. |
| Pip value on 0.10 lots | 1 USD per pip | 10 USD x 0.10 = 1 USD. |
| Move in pips | 20 pips | From 1.0850 to 1.0870 on the chart. |
| Result in USD | 20 USD | 1 USD per pip x 20 pips = 20 USD. |
| Conversion rate used | ₱58 per 1 USD | An example rate only. The real rate changes and varies between providers. |
| Result in pesos | ₱1,160 | 20 USD x ₱58 = ₱1,160. |
Brokers may round the conversion rate, add a spread when you open and close, and charge a commission on some accounts. The pip value itself does not change with the exchange rate, but the peso amount does.
The mistake people make here
The common mistake is to read the profit in pips and treat it as money. Twenty pips sounds the same on every trade, but on 0.10 lots of EUR/USD it is ₱1,160 at the example rate, while on 1.00 lot it is ten times that, and on 0.01 lots it is one tenth. The second mistake is to forget that the pip value is quoted in the quote currency, so a peso figure always needs a conversion. Before placing an order, check the pip value for your exact lot size and pair in your platform, and work out the peso amount from there.Check yourself
If one pip on 0.10 lots of EUR/USD is 1 USD, what is twenty pips worth in USD?
1 USD per pip x 20 pips = 20 USD.
Using the example rate of ₱58 per 1 USD, what is 20 USD in pesos?
20 USD x ₱58 = ₱1,160.
If you trade 0.01 lots instead, what is one pip worth in USD?
10 USD x 0.01 = 0.10 USD per pip.
In the Philippines
- Money
- The peso, written ₱ (PHP).
- Instrument in these examples
- EUR/USD, around 1.0850.
- Regulator
- SEC Philippines. Check that a firm is registered before sending money.
- Payment methods
- GCash and bank transfer are common ways to fund and withdraw. Fees and processing times vary between providers.
- Peso conversion
- The USD to PHP rate changes daily and differs between banks and platforms, so any peso figure here is an example only.