Pip Value and Contract Size: Standard, Mini, and Micro Lots

Position sizing in forex starts with three numbers: contract size, pip value, and risk. Get any of them wrong and a "1% risk" trade quietly becomes 5% or 0.2%. The math is fixed — memorize it.

Contract Sizes

• Standard lot: 100,000 units of the base currency.
• Mini lot: 10,000 units (0.1 standard).
• Micro lot: 1,000 units (0.01 standard).

A 1.0 standard lot of EUR/USD is €100,000 against USD. A 0.30 lot is €30,000. Most retail platforms quote position size in lots; some quote units. Confirm before calculating.

The Pip

A pip is the fourth decimal place for most pairs (0.0001) and the second for JPY pairs (0.01). EUR/USD moving from 1.0850 to 1.0851 is +1 pip. USD/JPY moving from 150.00 to 150.01 is +1 pip. Some brokers quote fractional pips (the "pipette," fifth decimal) — these are for spread display, not for pip-value math.

Pip Value Formula

Pip value (in quote currency) = (Pip size × Contract size).

For a standard lot of EUR/USD: 0.0001 × 100,000 = $10 per pip.

For a standard lot of USD/JPY: 0.01 × 100,000 = ¥1,000 per pip. Convert to USD by dividing by the USD/JPY rate — at 150.00, that is ¥1,000 ÷ 150 = $6.67 per pip.

Mini lots divide pip value by 10 ($1/pip for EUR/USD); micro lots divide by 100 ($0.10/pip).

Position Sizing by Risk

Step 1: Define risk in account currency. Risk = account balance × risk percent. A $10,000 account at 1% risk = $100.

Step 2: Define stop distance in pips. A 30-pip stop on EUR/USD.

Step 3: Lot size = Risk ÷ (Stop pips × Pip value per lot). $100 ÷ (30 × $10) = 0.33 standard lots. Trade 0.33 lots or 3 mini lots plus 3 micros.

For USD/JPY at 150.00 with a 25-pip stop: pip value per standard lot = $6.67. $100 ÷ (25 × $6.67) = 0.60 standard lots.

Common Errors

• Quoting JPY pip value in USD without converting. A "10-pip" JPY stop is not $100 unless you did the division.
• Mixing mini and micro lots when scaling out — label each sub-position.
• Ignoring that pip value changes as the quote currency moves. For USD/JPY, a 5% move in the rate changes pip value by 5%.

Practical Rule

Pre-build a pip-value table for the 5-10 pairs you trade, refresh weekly. Position size should take 30 seconds on a calculator, not a guess at execution. Exact sizing is the difference between a 1% loss and a 3% loss when the stop hits.