Pips is a unit of calculation used by Forex traders to calculate the profit or loss of the transactions they make. If you take a look at the quote currency starting from the point (.) and count 4 digits, then 4th place is the pips value in the offer. For example, when the currency pair moves from 1.4020 to 1.4025, then it moves 5 pips. And, if one pip has a value of $10 for 1 trading lot, then the profit is $50. To calculate the pip value, the trader usually uses the following pip formula: Price requested for currency trading divided by 1 pip multiplied by the trade value. This result gives the value of pip amounts obtained or lost in trade.