Lesson 7: What is a pip worth in forex? Trade sizes and more …


– Hey everybody, I’m Rob Booker, inventor of the paper clip. That’s not actually true. Welcome back to our FX
Trading 101 lessons. I’m happy to be here, thanks to our sponsor Forest Park FX. Pip value, it’s the
question on everyone’s mind. How much is a pip worth? We talked about it earlier, we talked about the spreads, we talked about the commissions, we talked about the quotes, we talked about buying
and selling a little bit. Let’s say, Nate, that you made 10 pips. Is that a lot of money? Is it not a lot of money? How much money is it if you make 10 pips? Well, it all depends. There are in the world
of currency trading, three different primary trade sizes and this applies to 99% of all of you that are gonna be doing trading. The first trade size is the smallest and it’s called a micro lot. This is what we use when
we first start trading and it’s the smallest trade size possible. Now inside of your trading account, you might see, when you
open up an order window, the word volume. This refers to your trade size, okay? So it might say volume but
it refers to trade size. And there is a bunch
of number with decimals and I wanna break those down, as I mentioned starting
with, if I can anyway, starting with the micro lot. So this is referred to as a micro lot. I don’t know why they use the word lot but it’s a lot size or
it’s just trade size, lot size, micro lot, whatever. A micro lot represents
1,000 units of currency. So 1,000 units of currency. And it is generally shown
in your trading account as .01 as the volume or as the trade size. So I’m gonna use the word volume here because most of you are
gonna use Meditrader and that’s the word you gonna see. So that would be the volume. This is worth 10 cents or 10 pennies or what’s the fraction in Pounds? Fraction of a Pound is? – [Nate] Pence. – Pence? 10 pence or whatever currency that you’re dealing with in your country. The trade size is a micro lot, it’s the smallest one
you can probably trade, it’s 1,000 units of currency, it’s a trade size of .01 or
a volume size of .01 lots and for every pip moved it’s 10 cents. So going back to our original question. If you made 10 pips trading
one micro lot, Nate, if you made 10 pips,
what would that be worth? And if you’re playing
along at home, let me know. If you made 10 pips what
would that be worth? And you can shout it at
your computer screen. – [Nate] 10 cents? No. A dollar? – A dollar, so 10 pips, great job Nate, 10 pips equals one dollar or if you’re trading in the UK one pound or if you’re trading in a euro
denominated account one euro or if you’re trading in a yen
account it would be 100 yen, if you’re trading in Australia
with Australian dollars, it would be one Australian dollar because you made 10 pips,
each one was worth 10 cents. Now these numbers are approximate. For most currencies this is
exactly what it will look like. If you’re trading the Japanese yen, it might be seven cents per
pip or eight cents per pip. If you’re trading the British
pound, Australian dollar, it might be 13 cents a pip or some other number close to this number. That makes sense, Nate? So it’s close to this number,
that’s a general range. The next trade size that
you can trade is a mini and it’s 10 times larger than a micro. What’s 10 times larger than a micro, Nate? – [Nate] .1? – So .1 is the volume, excellent. That’s the volume and you would be trading in this case 10,000 units of currency instead of 1,000. So if every micro lot was worth 10 cents, what’s every mini lot worth approximately? – [Nate] One dollar. – One dollar, one Australian
dollar, one pound, one euro, 100 yen and so forth on down the line, depending on where your
account was initiated. One dollar per pip. Now this is a general number. If you’re trading the
US dollar, Japanese yen in the United States it
might be worth 79 cents, might be worth 80 cents. You’re trading the British
pound, Australian dollar it might be worth 1.20 dollar or something along those lines. It’s gonna change but it’s
gonna be in this range. So if you make 10 pips
on a mini lot, Nate? How much money have you made? – [Nate] 100 dollars. – 10 pips on a mini lot would be? – [Nate] I was gonna say that was 100 but I guess I’m gonna go with 10. – It would be 10 dollars because one pip is worth a dollar and 10 of them would be worth 10 dollars. Now what if you made 10 pips
but you traded two mini lots. – [Nate] 20 dollars. – 20 dollars. How many units of currency
would a mini lot be worth? – [Nate] 20,000? – 20,000 units of currency. What would the volume number look like? – [Nate] Ah, .2. – .2 and what would the
dollar value per pip be? – [Nate] Two. – Two dollars. If you traded, what if
you traded five mini lots, play along with me at home. What’s your value per
pip on five mini lots? – [Nate] Five dollars. – Five dollars, there you go. The mini lot is one of the
most commonly traded units. When I started trading in the year 2000, you couldn’t trade a micro or a mini. You had to trade what
is called a standard. Standard lot was the
original largest trade size. Well it was the original trade size, everything was quoted in standard lots. If a standard lot is 10
times larger than a mini lot, 10 times larger than a mini lot, what’s the standard lot
in units of currency? – [Nate] 100,000. – 100,000 units of currency. Okay, so you’re controlling
the euro, dollar for example, if you trade one standard lot, you’re controlling 100,000
dollars worth of euro, US dollar. Sounds crazy, sounds big,
it’s not really that big. Standard lot is 100,000 units of currency and how would you quote that with volume? – [Nate] One. – It would be a one, a 1.0
volume or trade size, one lot. That was what they used to call it, they didn’t have to call it a standard lot cause it was just the only one available. And what’s the value per pip? – [Nate] Ahm, 10. – 10 dollars per pip. So if you made 10 pips
with a standard lot, how much money have you made? – [Nate] 100. – You’ve made 100 dollars. Now we’re gonna talk later on about how much money you need in your trading account
to trade these sizes. But now you have a good idea
of what each of these is worth. So we’re gonna do a little quiz here and you can play along at home. Using the stuff that you
learned inside of this lesson, if, Nate, if you made seven pips with, no. If you made 10 pips with 7 mini lots, how much money have you made? – [Nate] 70 dollars? – You’ve made seven dollars. – [Nate] Seven dollars. I gotta write slower here or else the board really dislikes me. If you have made 10
pips on five micro lots, how much money have you made? – [Nate] 50 cents? – 50 cents or 50 pence or whatever. This is great. If you have made 10 pips
with 20 standard lots, how much money have you made? – [Nate] Thousand? – So you’ve made 20 times 10. – [Nate] Oh. – Which would be … – [Nate] 200. – 20 standard lots, 10 pips, 200 dollars. Okay, so now you know about
trade sizes and pip values. Remember these numbers are approximate. If you’re trading the euro, US dollar these are exactly correct. And if you’re trading
the pound, Japanese yen these numbers slightly change but stay in a range that is very similar. The best way to experiment with this is to open up your
demonstration trading account and to play around with taking orders and taking trades and whatever else. Now we’re gonna talk about
that a little bit later on but the best way to find
out what each thing is worth is to open up your trading platform and start playing around with this and start taking few trades. To wrap things up, I wanna thank
our sponsor Forest Park FX. Interested in FX trading,
contact Forest Park FX to open an account and
receive cash back rebates on every trade you place. You can go to forestparkfx.com. Forex trading carries a
substantial risk of loss and it not suitable for everyone. Terms and conditions will apply. We’ll see you in the next lesson.

60 thoughts on “Lesson 7: What is a pip worth in forex? Trade sizes and more …”

  1. Rob, thanks for all the info. I am having a problem w/ the math. Your examples are:
    10 pips w/ 7 mini lots and your answer was $7. Isn't Nate actually correct w/ $70? Mini lot pip value = $1, # of pips 10, # of lots 7.
    10 pips w/ 5 micro lots. Micro lot pip value = $0.10, # of pips = 10, # of lots = 5 for $5.
    10 pips w/ 20 standard lots. Standard lot pip value = $10, # of pips = 10, # of lots = 20 for $2000. Please point out the mistake I am making.

  2. This was great, thanks, I've been looking for "forex pip example" for a while now, and I think this has helped. Have you ever come across – Menabeth Pips Parapraxis – (should be on google have a look ) ? Ive heard some decent things about it and my work buddy got great results with it.

  3. 🤦🏻‍♂️🤦🏻‍♂️🤦🏻‍♂️ why you wanna trade if you dont know simple math PEOPLE/“TEACHER”?🤣🤣🤦🏻‍♂️🤦🏻‍♂️

  4. How much would be a safe % to leverage of your total account if you were trading with 1:100, 1:500, or 1:1000 leverage? There is a lot of talk about risking just 1-2% or maybe 5% of your account, but wouldn't all of this depend on your leverage? Or maybe I'm confused. Let me know!

  5. but i been trading for years and .01 lot sizes always nets 1 penny per pip, i understand this guys trying to be professional but i know im not missing something.. am i? is he counting the pip as the 4th or the 5th decimal place?

  6. Hello Rob , Nice course, but i think there is a small mistake where you said 7mini profit is 7 usd i think it should be 70 usd

  7. A standard lot costs (or controls) $100,000, hence, a I have to control $2 million to make $200? Thus, I need to leverage my $20k by a factor of 100x to make $200? That seems a lot. What am I missing?!

    By your calculations doesn't winning 20 pips on ONE standard lot equal $200? TWENTY such standard (i.e., 100,000 unit) lots would seem to equal $4,000. Again, what is it I'm missing?!

  8. Are you talking about the number of pips made INSIDE EACH INDIVIDUAL standard lot, or a total of pips made by way of all the standard lots available?

  9. Winner of a video, I've been looking for "how much is 1 pip worth in forex trading" for a while now, and I think this has helped. You ever tried – Menabeth Pips Parapraxis – (do a search on google ) ? Ive heard some awesome things about it and my colleague got amazing results with it.

  10. This was great, been searching for "forex trading size calculator" for a while now, and I think this has helped. Have you heard people talk about – Menabeth Pips Parapraxis – (Have a quick look on google cant remember the place now ) ? Ive heard some amazing things about it and my buddy got great results with it.

  11. You are great at explaining pips and what they are worth. It took me 5 videos to finally feel comfortable on how to properly calculate pips

  12. Can help me find the answer?? Because I don’t know about stock market, than I deposit my money to the broker market. But after I get the email because my account not active to do tradings, than the person call me for automatic account, than my account became lost, $3250 less than 2 weeks became $82 actually what happens?? This my wrong or I got scamming??

  13. Your calculations are wrong. In the final example, you said that 20 standard lot gives you a profit of 200 usd. How so? Shouldn't it be 2000 usd? Like 20x10x10=2000.

  14. 7 pips mini (1)lot = $7
    5 pips micro (1)lot = $0.5
    20 pips std (1)Lot = $200

    7 pips mini (10)lot = $70
    5 pips micro (10)lot = $5
    20 pips std (10)Lot = $2000

    7 lot mini (10)pips= $70
    5 lot micro (10)pips=$5
    20 lot std (10)pips=$2000

  15. Cracks me up, thinks he knows when hes talking big lots and he has to ask for confirmation and still gets it wrong.
    Selling something??????

  16. I'm new and practicing my pip count but I need help on my demo I bought at , .01 and 1.2220 and I increased my money by 1.2615 how many pops? Is it over 400 pips

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  18. Hi Rob,
    Thanks for the lecture and most importantly not creating followers but learners. 10pips on 20 standard Lot , when each pip is =$10, after a second thought I got this. (10X20) $10 =$2000 Thanks Rob.

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  20. This guy may have once been a good trader, but he has become a marketer for people like NOFT. Do NOT buy the naked pairs! piece of crap indicator!

  21. Could someone help me? I noticed that in this video that when describing compounding profits by increasing amount per pip size a discrepancy. In that video, (And every other one I can find.) It shows that a full lot is worth $10 per pip .50 is worth $5 a pip and so forth down to the micro lots. However, it doesn't seem to work that way for me. I trade with Oanda and use MT4. I use 50:1 margin. (No not all the time. I try to only trade 1-2 % of my account.) When I trade one standard lot per pip it only counts as $1.00. .50 only counts as $0.50… etc down the line. Am I doing something wrong with the settings or something? Thank you for any help in advance!

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  23. Only You can help :-/

    If we have standard account or 1000$ account and start trade 0.10 so how much pip i get i think per pip value is 1$ or 10 pip value is 1$ (if i start trading with 1.00 so i get 10$ ) i hope I'm wright and you can understand so you can corect me

  24. It’s broad as can be. Alec did show me a thing or two. Very remunerative trading is. Trade forex it’s mind blowing

  25. I found this video very educational, thank you. I will start from the first video now and watch all the way till the end.

  26. Thanks Rob, I see there's a bit more involved, I opened a account here in Canada getting excited, wish I had a tutor for a few days, keep it coming, have a great week..

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  28. my gosh are you ok ? 20 stnd lots ,if you make 10pips? how much will you make? 200dollars? hey how 2 stnd lots ? you are cheating newbies here. rubbish video

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