How to Calculate PIP Size - Forex 101

Carrying on from our last post (position sizing strategies), we will now answer the other commonly asked question, "How do I calculate my pip size when trading Forex?". Unlike position sizing, calculating pip size is not as straight-forward - you may need the help of a calculator!

How to calculate Forex pip size

To make the process a bit easier, we have broken the pip size process into step-by-step calculations and have also included a video...

Step 1

Calculate how much you wish to risk per trade (0.5% of account etc.) and then calculate the monetary value i.e I am going to risk 1% of my $2,000 account so I will be risking $20 per trade (2000*0.01).

Step 2

Each time you plan on entering a trade, you will need to adjust your lot/unit size according to the pip size of your stop loss. Let's say that you are going to enter a trade with a 10 pip stop loss. You will need to divide your risk amount ($20) by the stop loss pip size (10). This will give you the price per pip that you need to risk. In this example, it would be $20 / 10 pips = $2 per pip.

Step 3

If you are using a spread betting provider, you can enter $2 per point. Fini.

If you are trading with lot or unit sizes, you will need the help of a pip size calculator...

Step 4

The pip size calculator will let you know the price per point for any amount of lots or units. Use the calculator to find the lot/unit amount that tallies with your price per pip amount ($2). In this example, if the trade was on the EURUSD, you would need to enter 0.2 lots/20,000 units as your trade size (as at 06/03/2017).

Use our Forex pip calculator.

Step 5

Confused? Try the video below..

There is a very high degree of risk involved in trading.Past results are not indicative of future returns. Technical Forex and all individuals affiliated with this site assume no responsibilities for your trading and investment results. The indicators, strategies, columns, articles and all other features are for educational purposes only and should not be construed as investment advice.Information for forex trading observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the trading observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein. Affiliates of Technical Forex may have a position or effect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies. Trading Forex, Options on Forex, and any retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time. Technical Forex is not an investment advisory service, is not an investment adviser, and does not provide personalized financial advice or act as a financial advisor. Technical Forex exists for educational purposes only, and the materials and information continued herein are for general informational purposes only. None of the information provided in the website is intended as investment, tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement, recommendation or sponsorship of any company, security, or fund. The information on the website should not be relied upon for purposes of transacting securities or other investments. You hereby understand and agree that Technical Forex does not offer or provide tax, legal or investment advice and that you are responsible for consulting tax, legal, or financial professionals before acting on any information provided herein.

Technical Forex is dedicated to providing high quality content on Forex technical analysis -