Guide · 4 min read
What is a pip, and what does a spread cost?
Pips are the unit every broker uses to quote spreads. Once you can turn pips into dollars, comparing brokers becomes simple arithmetic.
What is a pip?
A pip is the fourth decimal place in most currency pairs (0.0001) and the second in yen pairs (0.01). If EUR/USD moves from 1.0850 to 1.0851, it has moved one pip. Many brokers quote a fifth decimal, called a pipette or fractional pip.
Pip value by lot size
| Lot | Units | EUR/USD pip value |
|---|---|---|
| Standard | 100,000 | $10.00 |
| Mini | 10,000 | $1.00 |
| Micro | 1,000 | $0.10 |
Turning a spread into dollars
The spread is the gap between the buy and sell price. You pay it once per round turn. At 1.4 pips on one standard lot of EUR/USD, that is 1.4 × $10 = $14. Add any commission to get the all-in cost.
Gold is different
On XAU/USD, one standard lot is usually 100 ounces, so each $0.01 move is worth $1 and a $1 move is worth $100. Gold spreads are therefore quoted in cents: a 20-cent spread costs $20 per lot. See the best brokers for gold.
Frequently asked questions
How much is 1 pip worth?
On EUR/USD, one pip is worth $10 per standard lot, $1 per mini lot and $0.10 per micro lot.
What is a pipette?
A pipette is one tenth of a pip, the fifth decimal place on most pairs.
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