Lot, pip and position value: avoid comparing the wrong units
Work through units, contract size and account currency before estimating costs or risk.
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Three numbers that should not be mixed
A lot is a trading-volume convention, a pip is a price-change convention, and a currency amount is a monetary result. None of these is interchangeable without the instrument specification. Different asset classes may use different contract sizes. Write the symbol, contract size, quotation convention and account currency above every calculation.
Diagram explained
Contract size and quote currency determine pip value.
- For EUR/USD, assuming a standard lot of EUR 100,000 and one pip of USD 0.0001 per euro, pip value is USD 10.
- A 20-pip price move then corresponds to USD 200 profit or loss before transaction costs. Direction determines whether it is a gain or loss.
- Other pairs, metals, indices and crypto use different contract specifications. If your account is not in USD, conversion also applies.
A worked illustration
Assume, solely for illustration, 100,000 units of a pair quoted in USD and a pip size of 0.0001. A one-pip move then represents USD 10 for one lot before costs. At 0.1 lot it represents USD 1. This assumption must not be copied to gold, indices, cryptocurrency or every currency pair.
A second conversion may be needed when the quote currency differs from your account currency. Keep that conversion separate so it is visible. For a spreadsheet, use named inputs rather than a hidden constant: volume, contract size, price increment and conversion rate. Check the resulting amount against the platform’s symbol specification.
Why this matters when comparing brokers
A fee per standard lot is not automatically comparable with a fee per USD 100,000 traded. IC Markets’ official account page uses different charging bases for its listed platforms. Compare the same instrument, currency and transaction direction. The useful output is a monetary cost for the same hypothetical order, not the smallest-looking number in a table.
Check the specifications before choosing an account
Lot size, pip value and contract size must match the instrument you plan to trade. If you are researching IC Markets, explore the account options and confirm the specifications for that instrument.
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Sources and scope
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