{"term":{"slug":"pip-value","term":"Pip Value","definition":"The monetary value of a one-pip movement in a forex pair for a given lot size. For USD-denominated pairs, 1 pip on a standard lot is approximately $10. Pip value varies for cross-currency pairs.","extendedExplanation":"A pip (percentage in point) is the smallest standard price movement in forex, typically the fourth decimal place (0.0001) for most pairs. For JPY pairs, a pip is the second decimal place (0.01).\n\nPip value is essential for calculating position size, risk, and profit/loss. The formula is: Pip Value = (0.0001 / Exchange Rate) * Lot Size * Contract Size. For USD-quoted pairs (EUR/USD, GBP/USD), the calculation is simplified: 1 standard lot = $10 per pip.\n\nIn prop firm trading, understanding pip value is critical for staying within daily loss limits. If your daily loss limit is $2,000 and you trade 2 standard lots of EUR/USD (pip value = $20), you can only afford a 100-pip adverse move before hitting the limit. This informs your stop-loss placement and maximum position size.","exampleWithNumbers":"Trading GBP/USD at 1.2700 on FTMO $100K. Standard lot pip value: $10. Mini lot pip value: $1. You trade 5 standard lots with a 40-pip stop. Risk: 5 * 40 * $10 = $2,000 (2% of account). Daily loss limit: $5,000. You have room for 2.5 full stop-outs before hitting the daily limit. Target: 80 pips = 5 * 80 * $10 = $4,000 reward.","category":"risk","relatedTerms":["lot-size","tick-value","position-sizing","risk-per-trade","stop-loss"]},"_links":{"self":"https://runvigil.app/api/glossary/pip-value","page":"https://runvigil.app/learn/pip-value","allTerms":"https://runvigil.app/api/glossary","learn":"https://runvigil.app/learn"}}