A pip is the smallest standard price increment for an instrument. For most Forex pairs, one pip is 0.0001 (the fourth decimal).
Profit or loss = (price change in pips) × (lot size in units) × (pip value). For 1 standard lot of EUR/USD, one pip is roughly $10. For 1 micro-lot, one pip is roughly $0.10.
What a pip is
A pip — "percentage in point" — is the standard unit of price movement. For EUR/USD trading at 1.0850, the next pip up is 1.0851. For pairs quoted to two decimals (like USD/JPY at 150.25), the pip is 0.01. Most platforms also show a fractional pip (the fifth or third decimal) for finer granularity, but standard pip values are the unit you size positions around.
In Forex trading, 1 standard lot equals 100,000 units of the base currency. For EUR/USD, 1 pip movement is approximately $10 per standard lot.
0.1 lots = approximately 10,000 units (around $1 per pip on EUR/USD)
0.01 lots = approximately 1,000 units (around $0.10 per pip on EUR/USD)
Lot calculations may differ depending on the asset class (Forex, crypto, stocks, indices, etc.). On nomo, many instruments support fractional lot sizes such as 0.01 lots, which may help traders manage risk more carefully while learning.
Calculating P&L
The formula is straightforward: pip movement × pip value = profit or loss. Bought 1 mini-lot (10,000 units) of EUR/USD at 1.0850, closed at 1.0890 — that's 40 pips × $1 per pip = $40 profit. Bought 0.5 standard lots and closed 50 pips against you — 50 pips × $5 (half a standard lot) = $250 loss. Most platforms display floating P&L in real time on the open positions panel.
Other instruments
Indices like S&P 500 are quoted in points, not pips. The point value depends on the contract specification (typically $0.01 per point for CFD contracts).
Crypto pairs use the actual price tick. 1 BTC (with a contract size of 1) moving from $50,000 to $50,100 is $100 per unit traded.
Stocks are quoted in the local currency of the exchange. P&L is straightforward: (sell price − buy price) × shares.
Important notes
The exact pip value depends on your account currency and the quote currency of the instrument. Most platforms show this on the order ticket — use the displayed value.
Spread cost is paid as part of the entry. A 1-pip spread means you start the trade 1 pip in the red; the price needs to move 1 pip in your favour just to break even.
Swap (overnight charge) is added to P&L for positions held past 21:00 UTC. This is separate from price movement.