Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. You could sustain a loss of some or all of your initial investment and should not invest money that you cannot afford to lose. Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. You could sustain a loss of some or all of your initial investment and should not invest money that you cannot afford to lose.

# Pip value definition

Pip value is the value attributed to a one-pip move in a forex trade.

The definition of a pip can vary between currencies, but it is usually equal to the fourth figure after the decimal point in a currency listing. In GBP/USD, for instance, 0.0001 is one pip. Because pips are tiny in value, forex trades in micro lots, mini lots and lots: 1,000, 10,000 or 100,000 units of currency.

To calculate pip value, divide one pip (usually 0.0001) by the current value of the currency pair. Then, multiply that figure by your lot size: the number of base units that you are trading.

### Pip value example

If GBP/USD is trading at 1.5000 and you are trading the equivalent of \$100,000 then one pip would equal \$6.6666, as:

(0.0001/1.5000) x 100,000 = 6.6666

The value of a pip in dollars would be calculated as the value of one pip multiplied by the exchange rate (1.5000), in this instance \$9.9999.