What is a pip?
A pip ('percentage in point') is the standard unit for measuring a change in a currency price. For most pairs it is the fourth decimal place, 0.0001. For pairs quoted in Japanese yen, such as USD/JPY, it is the second decimal place, 0.01.
- EUR/USD moves from 1.1000 to 1.1025 — that is 25 pips.
- USD/JPY moves from 150.00 to 150.40 — that is 40 pips.
- Prices are often shown with one more digit (1.10253). That last digit is a fractional pip, or 'point': one tenth of a pip.
What is a lot?
A lot is the size of your trade. In forex one standard lot is 100,000 units of the base currency. On AlphaFX Pro you can trade from 0.01 lot in steps of 0.01.
| Lot size | Name | Units of base currency |
|---|---|---|
| 1.00 | Standard lot | 100,000 |
| 0.10 | Mini lot | 10,000 |
| 0.01 | Micro lot | 1,000 |
Other markets use different contract sizes — for example one lot of gold (XAU/USD) is 100 ounces. The contract size for every instrument is listed on the Markets page.
How much is a pip worth?
Pip value = pip size × position size. For any pair quoted in US dollars, such as EUR/USD, GBP/USD or AUD/USD, the answer comes out directly in dollars:
| Lot size | Units | Value of 1 pip | Value of a 20-pip move |
|---|---|---|---|
| 0.01 | 1,000 | $0.10 | $2 |
| 0.10 | 10,000 | $1 | $20 |
| 1.00 | 100,000 | $10 | $200 |
For pairs where the US dollar is not the quote currency, the pip value is in the quote currency and converted at the current rate. On USD/JPY, one pip on 1 lot is 1,000 yen, which is roughly $6–7 depending on the exchange rate.
Forex leverage explained
Leverage is the ratio between the size of your position and the margin you need to open it. At 1:100 you put up 1% of the position's value; at 1:50, 2%; at 1:10, 10%.
| Leverage | Margin required |
|---|---|
| 1:100 | $1,100 |
| 1:50 | $2,200 |
| 1:20 | $5,500 |
| 1:10 | $11,000 |
On AlphaFX Pro the maximum leverage is up to 1:100 for forex and metals, 1:50 for indices, 1:20 for energies, 1:10 for crypto and lower for share CFDs. You do not have to use all of it — position size, not the leverage setting, decides how much you can lose.
Putting it together: a worked example
- 01
Account of $2,000
You buy 0.20 lot of EUR/USD at 1.1000 (a $22,000 position).
- 02
Margin used
At 1:100 the margin is $220. The remaining $1,780 is free margin.
- 03
Pip value
0.20 lot × $10 per pip per lot = $2 per pip.
- 04
Outcome
A 40-pip move is ±$80 — 4% of the account. A 200-pip move against you would cost $400, or 20%.
Notice that the margin ($220) says nothing about the risk. The risk is pip value × distance to your stop loss. Size every trade from that number.
Frequently asked questions
How much is 1 pip worth on EUR/USD?
About $10 on 1 standard lot, $1 on 0.1 lot and $0.10 on 0.01 lot.
What is the smallest lot size I can trade?
0.01 lot (a micro lot), which on EUR/USD is 1,000 euros of exposure and about $0.10 per pip.
Is higher leverage riskier?
Higher leverage lets you open bigger positions with less margin, and bigger positions lose money faster. The real risk is set by position size and stop distance, so keep both under control.
What is a pipette?
A pipette, or point, is one tenth of a pip — the fifth decimal place on most pairs and the third on yen pairs.
Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. This page is general information, not investment advice. Read the Risk Disclosure.