If you entered EUR/USD long at 1.0500 and prices moved higher to 1.0550, it means that you made 50 pips. Congratulations! You’ve earned some money. OK, you might say, but how much? Good question! Let us calculate your profits.

There is a simple formula for this:

1 pip in the decimal form / the current exchange rate of the quote currency to the US Dollar = value per pip.

In our case:

0.0001/ 1 = 0.0001 (rounded up). It means that you will get this sum for every pip of your profitable trade.

As you can see is not a large sum of money. Well, it’s because it is the value of a pip per unit, but traders operate with a bigger number of units — so-called lots.

Calculate the profit using the FBS calculator

What is a lot?

A lot is an order of a certain number of units. Historically, spot Forex trading was only available in specific amounts of base currency called lots. A standard size of a lot equals to 100,000 units of a base currency. Later on, when Forex market opened for traders with smaller capital, a mini and even a micro lot became available.

Calculating 1 pip value for different currency pairs

You may see that the smallest lot is a micro lot (1,000 units of a base currency, it is often referred to as 1K). You can trade 1 000, 2 000, 3 000 or 124 000 units so long as it can be multiplied by 1K. Each 1K is referred to as a lot.

So, if you as in the last example open a long trade with one standard lot on EUR/USD, you will be buying 100,000 units. In this case, your profit will be not 0.00009478 USD for 1 pip the price goes in your favor, but 0.00009478 USD *(multiplied) 100,000 which is approximately 9.4787 USD. You may also open trade with mini (10,000), or even micro (1,000) lots. In this case, your profits will be something like 0.94786 USD and 0.09478 USD per 1 pip accordingly.

You should remember that the US Dollar is a quote currency in many pairs (EUR/USD, GBP/USD etc.). It means that the exchange rate of the quote currency to USD equals to 1.

• For such pairs one pip will always cost \$10 when we trade a

100 000 — unit contract (1 standard lot):100 000 * 0.0001 / 1 = \$10 (pip value for EUR/USD)

• For the pairs where the US Dollar is a base currency (USD/CHF, USD/CAD), pip value depends on the exchange rate:

100 000 * 0.0001 / 1.0195 = \$9.8 (pip value for USD/CHF)

• For the pairs that include the Japanese yen the pip value is calculated as follows:

100 000 * 0.01 / 120.65 = \$8,28 (pip value for USD/JPY)

Calculating value of a pip

2021-09-01 • Updated

• How to open an FBS account?

Click the ‘Open account’ button on our website and proceed to the Personal Area. Before you can start trading, pass a profile verification. Confirm your email and phone number, get your ID verified. This procedure guarantees the safety of your funds and identity. Once you are done with all the checks, go to the preferred trading platform, and start trading.

• How to withdraw the money you earned with FBS?

The procedure is very straightforward.  Go to the Withdrawal page on the website or the Finances section of the FBS Personal Area and access Withdrawal. You can get the earned money via the same payment system that you used for depositing. In case you funded the account via various methods, withdraw your profit via the same methods in the ratio according to the deposited sums.

If you are 18+ years old, you can join FBS and begin your FX journey. To trade, you need a brokerage account and sufficient knowledge on how assets behave in the financial markets. Start with studying the basics with our free educational materials and creating an FBS account. You may want to test the environment with virtual money with a Demo account. Once you are ready, enter the real market and trade to succeed.

• How to activate Level Up Bonus?

Open Level Up Bonus account in web or mobile version of FBS Personal Area and get up to \$140 free to your account.

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