How pip value is calculated
A pip is the standard small price step: 0.0001 on most forex pairs, 0.01 on JPY pairs. On gold and indices traders count points instead.
Multiply the pip size by the contract size and the number of lots. The result is in the quote currency (the second currency of the pair), so it is converted to your account currency.
Pip value = Pip size ร Contract size ร Lots ร Conversion rate
Example: EURUSD
1 lot of EURUSD is 100,000 euros. 0.0001 ร 100,000 = $10 per pip. With a euro account at 1 USD = 0.926 EUR that is about โฌ9.26 per pip. At 0.10 lots it is $1 per pip.
Questions
What is a pip?
The fourth decimal on most forex pairs (0.0001) and the second on JPY pairs (0.01). Many brokers show a fifth decimal, a tenth of a pip, called a pipette.
Why does the pip value change?
When the quote currency is not your account currency, the value depends on the exchange rate. EURUSD pips are always $10 per lot, but in euros they move with the rate.
What about gold and indices?
Here we count points. On gold a 0.10 move is shown as one point, worth $10 per 100 oz lot. Index values per point depend on your broker, so check the contract specification.