What a pip is worth in money
Story of a trade that looked the same on the chart
A reader in Pune opened a USD/INR chart one morning and saw the price near 83.2500. She decided the rupee would weaken, so she bought the pair. The price rose twenty pips and she closed the trade. Her account gained ₹2.
Her friend in Delhi looked at the same chart, at the same moment, and made the same decision. He also bought USD/INR and also closed after twenty pips. His account gained ₹200.
Neither of them was right or wrong about the direction. The difference was the size of the position each one held. This lesson is about that difference, and about how to work out the money before the order is placed.
A pip is the smallest standard step in a price quote. On USD/INR, one pip is 0.0001. That part is fixed. What is not fixed is what one pip is worth in rupees.
Lot size as the multiplier between pips and rupees
A lot is the number of units of the pair being traded. On USD/INR, a standard lot is 100,000 units. A mini lot is 10,000 units. A micro lot is 1,000 units. Each is a fixed fraction of the one above.
The pip value in rupees is the lot size multiplied by 0.0001. For a standard lot that is 100,000 × 0.0001 = ₹10. For a mini lot it is 10,000 × 0.0001 = ₹1. For a micro lot it is 1,000 × 0.0001 = ₹0.10.
Notice what happened. The pip itself did not change. Only the number of units changed. The same twenty-pip move is worth ₹200, ₹20 or ₹2 depending on which lot was used.
This is why two people can watch the same chart, take the same direction, and end the day with very different results. The chart shows price. The lot size decides what that price move is worth in money.
Why the pair matters as much as the lot
Pip value also depends on which pair is being traded. The calculation above works cleanly on USD/INR because the quote is already in rupees. The pip value comes out in rupees without any further step.
On a pair quoted in another currency, the pip value is first worked out in that currency and then converted into rupees at the current rate. That conversion uses the rate at the moment of the trade, so the rupee figure can shift slightly even when the lot size is unchanged.
This is one reason a pip value is an estimate rather than a promise. Brokers may round the figure, quote a slightly different rate at execution, and add a spread or commission on top. Those costs sit between the pip value on paper and the money that reaches the account.
The figures in this lesson use USD/INR near 83.2500. They are an illustration of the method, not a fixed rule that applies to every pair or every broker. The method is what travels. The number does not.
One pip on USD/INR at three lot sizes
| Step | Amount | Note |
|---|---|---|
| Standard lot (100,000 units) | ₹10 per pip | 100,000 x 0.0001 = 10.00, so one pip is ₹10 |
| Mini lot (10,000 units) | ₹1 per pip | 10,000 x 0.0001 = 1.00, one tenth of the standard lot |
| Micro lot (1,000 units) | ₹0.10 per pip | 1,000 x 0.0001 = 0.10, one hundredth of the standard lot |
| Twenty pips on a standard lot | ₹200 | 20 x ₹10 = ₹200 |
| Twenty pips on a micro lot | ₹2 | 20 x ₹0.10 = ₹2 |
Brokers may round the pip value, quote a slightly different exchange rate at the moment of the trade, or charge a spread and commission on top. The pip value also varies between brokers and between pairs, so the figures here are an illustration rather than a fixed rule.
Doing it once, step by step
Work through the following steps once, using a calculator and the current USD/INR price. The aim is to turn a pip count into a rupee figure before any order is placed.
- 01
Write down the lot size
Find the lot size offered by the broker for USD/INR. It may be shown as units, or as standard, mini or micro. Convert it to units so the arithmetic is simple. Write the number on paper before going further.
- 02
Multiply by 0.0001
Multiply the lot size by 0.0001. For 100,000 units this gives ₹10. For 10,000 units it gives ₹1. For 1,000 units it gives ₹0.10. This is the pip value for that lot size.
- 03
Count the pips at risk
Decide, before entering, how many pips the trade needs to move to reach the target, and how many it can move against before the stop is hit. Use the distance on the chart, not a feeling about the market.
- 04
Multiply pips by pip value
Multiply the pip value by the number of pips. Fifteen pips on a mini lot is 15 × ₹1 = ₹15. Eight pips on a standard lot is 8 × ₹10 = ₹80. The result is the money at stake.
- 05
Compare with the account balance
Put the rupee figure beside the account balance. If a single trade risks a large share of the balance, the lot size is too big for that account. Adjust the lot size rather than the stop distance.
- 06
Check the broker's costs
Add the spread and any commission to the rupee figure. These vary between brokers and between pairs, so read the broker's own schedule. The pip value alone is not the full cost of the trade.
The mistake most people make here
A common mistake is to think of a pip as a fixed amount of money, so a twenty-pip gain feels like the same result every time. In practice the rupee value changes with the lot size, so a trade that looks identical on the chart can be ten or a hundred times larger in cash. Before placing an order, work out the pip value for the lot size being used, then multiply by the number of pips at risk. That single step turns an abstract price move into a number that can be compared with the account balance.Check yourself
A trade on USD/INR uses a mini lot of 10,000 units. The price moves 15 pips in the reader's favour. What is the gain in rupees?
One pip on a mini lot is 10,000 x 0.0001 = ₹1. Fifteen pips is 15 x ₹1 = ₹15.
A standard lot of USD/INR moves 8 pips against the reader. What is the loss in rupees?
One pip on a standard lot is 100,000 x 0.0001 = ₹10. Eight pips is 8 x ₹10 = ₹80.
The same 20-pip move gives ₹200 on a standard lot. What does it give on a micro lot?
A micro lot is one hundredth of a standard lot, so the pip value is ₹10 / 100 = ₹0.10. Twenty pips is 20 x ₹0.10 = ₹2.
Questions that come up next
Why did my friend and I get different rupee amounts from the same twenty-pip move on USD/INR?
The pip itself is fixed at 0.0001 on USD/INR. What changes is the number of units in the trade. A standard lot is 100,000 units, so one pip is ₹10. A micro lot is 1,000 units, so one pip is ₹0.10. The same twenty-pip move therefore pays ₹200 on one and ₹2 on the other.
How do I work out pip value for a lot size that is not standard, mini or micro?
Multiply the number of units by 0.0001. If the lot is 30,000 units, one pip is 30,000 × 0.0001 = ₹3. Then multiply by the number of pips you expect the price to move. That gives the rupee amount for that trade. The method is the same at every size.
Does the pip value change while my trade is open?
On USD/INR the pip value in rupees does not change with the exchange rate, because the quote is already in rupees. On a pair quoted in another currency, the pip value is first in that currency and then converted into rupees at the current rate. That conversion can shift slightly while the trade is open.
Is the pip value I calculate exactly what I will gain or lose?
No. It is an estimate. Brokers may round the pip value, and the rate at execution can differ slightly from the rate on the chart. Spread and commission are charged on top. The calculated figure is useful for comparing a trade with your account balance, not for predicting the final amount.
How do I use pip value to decide whether a trade is too large for my account?
Work out the pip value for the lot size you plan to use. Multiply it by the number of pips between your entry and your stop. That gives the loss in rupees if the stop is hit. Compare that number with your account balance before placing the order.
What is the smallest lot size I can trade on USD/INR?
The smallest lot size varies between brokers. Some offer micro lots of 1,000 units, and some offer smaller sizes. There is no single standard across the market. Check the contract specification page of the broker you use to see the smallest size available.
In India
- Currency
- Indian rupee, written ₹ (INR)
- Example instrument
- USD/INR, around 83.2500
- One pip on one standard lot of USD/INR
- ₹10, from 100,000 x 0.0001
- Regulator
- SEBI
- Payment methods
- UPI and bank transfer
The words used on this page
- Pip
- The smallest standard step in a price quote. On USD/INR, one pip is 0.0001. It is a unit of price movement, not a unit of money.
- Lot
- The number of units of a pair in a trade. A standard lot on USD/INR is 100,000 units, a mini lot is 10,000 units, and a micro lot is 1,000 units.
- Pip value
- What one pip is worth in money for a given lot size. On USD/INR, it is the lot size multiplied by 0.0001, which gives the figure in rupees.
- Spread
- The gap between the buying price and the selling price quoted by a broker. It is a cost on every trade and is charged on top of the pip value calculation.
- Commission
- A separate fee some brokers charge for executing a trade. It is not part of the pip value. Whether it applies, and how much it is, varies between brokers.
- Account balance
- The amount of money in your trading account. Comparing the rupee value of a planned loss with this balance is how you judge whether a trade is too large.
What to take away
- A pip on USD/INR is 0.0001, but its rupee value depends on the lot size.
- Pip value in rupees is the lot size multiplied by 0.0001, then multiplied by the number of pips.
- The same twenty-pip move pays ₹200 on a standard lot, ₹20 on a mini lot and ₹2 on a micro lot.
- Work out the pip value before placing an order, so the risk can be compared with the account balance.