Pips, Points, Lots and Contract Size
Every instrument has its own contract size and tick value. Getting this wrong makes every risk calculation that follows wrong too.
Every risk calculation in trading depends on knowing what one unit of price movement is worth in your account currency. Get this wrong and every stop, every target, and every position size that follows is wrong too.
The reason it is so often wrong is that there is no universal answer. Contract specifications differ by asset class, and assuming they are all the same is one of the most expensive beginner errors there is.
Pips, points, and ticks
A pip is the smallest standardised price increment in a currency pair quoted to four decimals — 0.0001 for most pairs, and 0.01 for pairs quoted in two decimals such as those involving the Japanese yen.
Indices, metals, and energies generally quote in points or ticks instead. A point on US30 is a one-dollar move in the index. These are not the same unit as a forex pip, and treating them as equivalent will break your calculations immediately.
Lot sizes
A standard lot in forex is 100,000 units of the base currency. A mini lot is 10,000, and a micro lot is 1,000. These let you scale a position without changing how you measure risk.
Other asset classes do not use lots in the same sense. They use contracts, and the contract size is set by the instrument. There is no way to derive it — you have to look it up.
Contract size is instrument-specific
This is where assumptions break. A standard forex lot is 100,000 units. Gold is typically 100 ounces per lot, not 100,000. Silver is usually 5,000 ounces. WTI crude is commonly 1,000 barrels. Index CFDs are often one unit of the index per contract, which is why a one-point move is worth one unit of the quote currency.
If you apply a forex pip value to a gold position, you will be out by a factor of a thousand. The Pip Value Calculator on this site handles these differences for you, and it is worth checking any new instrument against it before you trade it.
Converting into your account currency
Pip value is calculated in the quote currency of the pair. If your account is denominated in a different currency, you need the conversion rate as well.
For a pair quoted as XXX/USD, the pip value is already in dollars. For USD/XXX, you divide by the exchange rate. For a cross such as EUR/GBP, you convert through the relevant rate. This final conversion step is the one most manual calculations skip.
Pip values at one standard contract, account denominated in USD. Note how far they diverge.
| Instrument | Contract size | Pip value in USD |
|---|---|---|
| EUR/USD | 100,000 units | $10.00 |
| USD/JPY | 100,000 units | ≈ $6.49 |
| XAU/USD (gold) | 100 oz | $1.00 |
| XAG/USD (silver) | 5,000 oz | $25.00 |
| US30 (index) | 1 contract | $1.00 per point |
| WTI crude | 1,000 barrels | $10.00 |
Key takeaways
- There is no universal pip value — contract size differs by asset class
- Gold is 100 oz per lot, silver 5,000 oz, WTI 1,000 barrels
- Pip value is quoted in the quote currency and must be converted to your account currency
- Check every new instrument against a pip calculator before you risk money on it
- A standard forex lot is 100,000 units of the base currency
- Pip value equals contract size multiplied by pip size, converted to your account currency
- Indices, metals, and crypto each use different contract specifications
- Gold is typically 100 oz per lot, not 100,000 units
Assuming one pip is worth the same amount across every pair and every instrument.
Reading is not verification
Take the concept you just read and turn it into explicit rules, then test it. That is the only way to know whether it actually works.
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