Pips and position size: a worked example in plain English
A pip is a conventional unit used to describe a currency price change. It is not a fixed amount of profit. The cash effect depends on the pair, the number of units and the currency in which the result is measured.
Work from the actual movement
For a hypothetical EUR/USD position of 10,000 euros, a price movement of 0.0001 dollars per euro corresponds to one dollar before costs. A movement of 0.0020 corresponds to twenty dollars. This example uses a USD quote and does not automatically apply to every pair.
Check the platform’s convention
Many pairs conventionally use the fourth decimal place for a pip; yen pairs commonly use the second. Platforms may display additional fractional digits. Read the contract specification instead of counting every last displayed digit as a full pip.
Repeat with smaller units
Calculate the same move with 1,000 units and then 100,000 units. The linear difference shows why a tiny price movement can have a large cash effect. If your account uses another currency, conversion also matters. Write down units, price difference, quote currency and costs on separate lines before trusting any profit figure displayed by a calculator.
Sources & further reading
Source material and official guidance. Original practical suggestions are editorial content, not statements from the organisations below. Selected references checked September 24, 2026; publication dates and context are stated in each article.
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