For many non-JPY currency pairs a pip is 0.0001; for many JPY pairs it is 0.01. A pipette is a smaller quote increment. Gold tick and pip conventions vary between brokers, so read the tick size, tick value and contract size rather than assuming a universal gold pip.
A standard forex lot commonly represents 100,000 base units. Smaller lots change the money earned or lost per pip. Add spread, commission, financing and currency conversion to the calculation. A backtest using midpoint prices and zero costs is not an estimate of your executable result.
Worked example
For 10,000 EUR/USD units, a 0.0001 move is 1 USD. Twenty pips is 20 USD before costs. At the same size, a two-pip spread is about 2 USD.
Check your understanding
What is the pip value of 25,000 EUR/USD units when the pip size is 0.0001?
Show explanation
2.50 USD per pip: 25,000 × 0.0001.
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