Pips measure distance. Lots decide how much money each pip is worth.
1.00Standard lot100,000 units · ~$10 per pip
0.10Mini lot10,000 units · ~$1 per pip
0.01Micro lot1,000 units · ~$0.10 per pip
0.001Nano lot100 units · ~$0.01 per pip (some brokers)
In MetaTrader you type volume in lots: 1.00 is a standard lot, 0.10 a mini, 0.01 a micro.
Calculating pip value
Formula
Pip value = pip size × units traded (in the quote currency)
When the quote currency is USD and your account is in USD, it's easy: 0.0001 × 100,000 = $10 per pip for one lot of EUR/USD.
When it isn't, convert. USD/JPY at 150.00, one lot: 0.01 × 100,000 = 1,000 yen per pip. Divide by 150 = $6.67 per pip.
Example
You buy 0.20 lots of GBP/USD and it rises 35 pips. Pip value = $10 × 0.20 = $2. Profit = 35 × $2 = $70.
Wick says
You don't need to do this in your head. Our pip value calculator and position size calculator do it for any pair.
Rookie mistake
Trading 1.00 lot on a $500 account because "it's just one lot." A 50-pip move against you costs $500. Account gone.
Key takeaways
- Standard lot = 100,000 units; mini 10,000; micro 1,000.
- On USD-quoted pairs, 1 lot ≈ $10 per pip.
- Lot size is the dial that controls your risk.