Been trading for a few weeks now but still confused about this basic stuff.
Everyone talks about pips and points like I should know what they mean. I get that they measure price movement but the actual calculation for EUR/USD is throwing me off.
For EUR/USD: 1 pip = 0.0001. With 1 standard lot, each pip’s worth $10.
Most people overthink this. EUR/USD moves in 0.0001 increments - that’s your pip.
Here’s the easiest way to calculate pip value: take your position size and move the decimal four places left. So 10,000 units = $1 per pip, 100,000 units = $10 per pip.
Brokers also show points (smaller divisions) but you can ignore those when you’re starting out.
One pip is fourth decimal place. Pip value equals position size times 0.0001.
A pip in EUR/USD is the fourth decimal place. Price goes from 1.0850 to 1.0851? That’s 1 pip.
Calculating pip value is easy. Take your position size and multiply by 0.0001. Trading a mini lot (10,000 units)? One pip = $1. Standard lot (100,000 units)? One pip = $10.
Some platforms show a fifth decimal place called points, but they’re just fractional pips. Don’t sweat it.
Here’s what trips up beginners: pip values change with other currency pairs, but EUR/USD stays the same since it’s quoted in dollars.
Your profit and loss comes down to pip value, so get this right. For EUR/USD, one pip is the fourth decimal place. Price moves from 1.0900 to 1.0920? That’s 20 pips. Pip value depends on lot size. Trade 1,000 units and each pip’s worth 10 cents. Trade 50,000 units and each pip’s worth $5. Formula: Position size times 0.0001 equals pip value in USD. Points are just tenths of pips. Some brokers quote to five decimal places but ignore that fifth digit for now.