Beginner · Lesson 5 of 11 · 8 min read

Pips, points and lot sizes

Before you can size a trade, you need to know what a move is worth in pounds. Here is how pips, points and lots work on forex, gold and indices.

PipsLotsPointsValue per move

Pips on forex

A pip is the standard small move on a currency pair. For most pairs it is the fourth decimal place (0.0001). For pairs with the Japanese yen, such as USDJPY, it is the second decimal place (0.01). If EURUSD goes from 1.0850 to 1.0870, that is 20 pips.

Many platforms show one extra digit. That last digit is a tenth of a pip, sometimes called a pipette. Mixing the two up makes everything ten times out.

Lot sizes

Lot	Units of currency	Roughly per pip on EURUSD
Standard: 1.00	100,000	$10
Mini: 0.10	10,000	$1
Micro: 0.01	1,000	10 cents

When the US dollar is the second currency in the pair, the pip value is in dollars. With a pound account your broker converts it, so $1 a pip is a little under £1, depending on the exchange rate.

Gold and indices

Gold is priced in dollars per ounce. On most MT5 accounts, 1 lot is 100 ounces, so a $1 move in gold is worth $100 on 1 lot, or $1 on 0.01 lots. Indices such as US30 move in points, and what one point is worth per lot differs between brokers. Always check the contract details: in MT5, right-click the market in Market Watch and choose Specification.

Spread betting makes it simpler

With a spread bet you choose an amount per point directly. At £2 a point, a 30-point move is worth £60. On forex spread bets, one point is usually one pip.

Key idea

Work backwards from your risk: money at risk ÷ stop distance = size per pip or point. Risk £20 with a 25-pip stop and your size is £0.80 a pip.

Worked example

Your account is £2,000 and you risk 1%, which is £20. You want to buy EURUSD with a 25-pip stop. £20 ÷ 25 pips = £0.80 a pip.

In a spread bet, that is a stake of £0.80 a point. On MT5, 0.10 lots is about $1 (a little under £1) a pip, so roughly 0.10 lots, or a touch less, keeps your risk at about £20.

Common mistakes

Avoid these

Confusing pips and pipettes, and getting sizes ten times wrong.
Assuming gold and indices work like forex.
Not checking your broker’s contract details.
Copying someone else’s lot size, when their account and stop are different.

Check yourself

1. EURUSD moves from 1.0850 to 1.0875. How many pips is that?

25 pips.

2. Roughly what is one pip worth on 0.10 lots of EURUSD?

About $1.

3. You risk £30 with a 30-pip stop. What spread bet stake per point is that?

£1 a point.

Try it on BTM

Position Size toolTurn your risk and stop into the right size.Risk managementWhy 1% or less per trade.Orders and costsSpreads, commission and swap, in pips and pounds.

For education only, not financial advice. Trading carries a high risk of losing money, especially with leverage. Only trade with money you can afford to lose.

For educational purposes only. Nothing here is financial advice. Past performance does not guarantee future results, and trading carries a high risk of losing money, so only trade with money you can afford to lose. Read the risk warning.