Profit and loss in offshore forex is determined by three things: pips (the size of the price move), lot size (the trade volume) and the type of currency pair. Required margin is calculated as trade value divided by leverage. For example, if USD/JPY moves 1 yen (100 pips), the profit or loss is 100,000 yen on 1 lot (100,000 units), 10,000 yen on 0.1 lot and 1,000 yen on 0.01 lot.
This article sets out the formulas for pips, lot size and required margin for beginners, and gives required margin charts for three instruments (USD/JPY at 150 yen, EUR/USD at 1.10 and gold (XAUUSD) at 2,500 dollars) across 0.01, 0.1 and 1 lot at 1:100, 1:500, 1:1000 and 1:2000 leverage. All yen conversions use a single rate of 1 dollar = 150 yen. The formulas are general definitions. The number of units in 1 lot and the definition of 1 pip for gold differ by broker and account type, so check each broker's contract specifications before trading.
What are pips? Pip calculation and the value of 1 pip
A pip is a unit for measuring movement in an exchange rate. For pairs involving the yen, such as USD/JPY, the second decimal place (0.01 yen) is 1 pip. For pairs that do not involve the yen, such as EUR/USD, the fourth decimal place (0.0001 dollars) is 1 pip. For example, if USD/JPY moves from 150.00 to 150.50, that is 50 pips, and if EUR/USD moves from 1.1000 to 1.1030, that is 30 pips.
The profit or loss per pip is calculated as the value of 1 pip multiplied by the number of units traded. For a yen-denominated pair, 1 lot (100,000 units) gives 0.01 yen x 100,000 units = 1,000 yen. For a dollar-denominated pair, you first work out the profit or loss in dollars and then convert it to yen.
| Lot size | Units | USD/JPY, 1 pip | EUR/USD, 1 pip |
|---|---|---|---|
| 0.01 lot | 1,000 units | 10 yen | about 15 yen (0.1 dollars) |
| 0.1 lot | 10,000 units | 100 yen | about 150 yen (1 dollar) |
| 1 lot | 100,000 units | 1,000 yen | about 1,500 yen (10 dollars) |
※ 1 lot = 100,000 units is the general definition. Depending on the account type, such as a cent account, 1 lot may be 1,000 units, so check the contract size on your trading platform. The yen value of EUR/USD changes with the USD/JPY rate at the time the profit or loss is realised.
Basic pip calculation formulas
- Move in pips = (closing rate - entry rate) / value of 1 pip (for a buy position; the sign is reversed for a sell)
- Profit or loss (yen-denominated pair) = pips x value of 1 pip x units traded
- Profit or loss (dollar-denominated pair) = pips x 0.0001 dollars x units traded x USD/JPY rate (converted to yen)
- The spread (the difference between the bid and ask prices) is quoted in pips, and appears as a cost in the form of a floating loss the moment you open a trade
The same 30-pip move produces ten times the profit or loss if the lot size is ten times larger. Do not judge a small move as safe by looking at pips alone. Always calculate the profit or loss together with the lot size, which is the starting point of money management.
Forex lot calculation: how many units is 1 lot? 0.01, 0.1 and 1 lot compared
A lot is the unit of trade volume. On the standard accounts of many offshore forex brokers, 1 lot of a currency pair is 100,000 units, 0.1 lot is 10,000 units and 0.01 lot (the minimum at many brokers) is 1,000 units. Be aware that if you place an order with the same sense as domestic (Japan-registered) forex, where 1 lot = 10,000 units, the trade volume will be ten times larger.
| Lot size | Units | Trade value at USD/JPY 150 yen | Trade value at EUR/USD 1.10 (in yen) |
|---|---|---|---|
| 0.01 lot | 1,000 units | 150,000 yen | about 165,000 yen (1,100 dollars) |
| 0.1 lot | 10,000 units | 1,500,000 yen | about 1,650,000 yen (11,000 dollars) |
| 1 lot | 100,000 units | 15,000,000 yen | about 16,500,000 yen (110,000 dollars) |
※ Trade value is units x rate. The yen value for EUR/USD is calculated at 1 dollar = 150 yen.
The most important factor in choosing a lot size is not whether you have enough margin, but how much your account balance would fall for the adverse move you anticipate. For 1 lot of USD/JPY, a move of just 1 yen is worth 100,000 yen. Even in an account with high leverage, where little margin is needed, increasing the lot size increases losses by the same proportion.
100,000 units is common for currency pairs, but it varies by account type; for example, cent accounts use 1,000 units. Gold, stock indices and cryptocurrency CFDs each have their own contract size. Before trading, check the contract size in the symbol properties from the Market Watch window in MT4/MT5.
Required margin formula at offshore forex brokers and its relationship to leverage
Required margin is the funds tied up in your account to hold a position. The formula is required margin = trade value / leverage, where trade value is lot size x units per lot x rate. The higher the leverage, the smaller the margin needed for the same trade value.
| Instrument type | Required margin formula | Example |
|---|---|---|
| Pairs involving the yen (USD/JPY etc.) | Lots x 100,000 units x rate / leverage | 1 lot, 150 yen, 1:1000 = 15,000 yen |
| Dollar-denominated pairs (EUR/USD etc.) | Lots x 100,000 units x rate x USD/JPY / leverage | 1 lot, 1.10, 150 yen, 1:1000 = 16,500 yen |
| Gold (XAUUSD) | Lots x contract size (for example 100 ounces) x price x USD/JPY / leverage | 1 lot, 2,500 dollars, 150 yen, 1:1000 = 37,500 yen |
※ At brokers whose account base currency is the dollar, the final yen conversion is not needed and the calculation stays in dollars. The contract size for gold differs by broker and account.
Required margin itself does not determine the size of your profit or loss. Raising leverage from 1:500 to 1:1000 does not change the profit or loss per pip; it only halves the funds tied up. What drives trading losses is the lot size, that is, the trade volume.
When high leverage makes required margin small, you can open a larger position with the same balance. As floating losses grow, the margin level falls, and once it drops below the broker's stop out level, positions are forcibly closed. Margin level and forced closing calculations are covered in detail in a separate column.
Offshore forex stop out calculation: how to work out margin level and levels by broker →
Cheat sheet: required margin by leverage for 0.01, 0.1 and 1 lot
We calculated required margin at 1:100, 1:500, 1:1000 and 1:2000 leverage for three instruments: USD/JPY at 150 yen, EUR/USD at 1.10 and gold (XAUUSD) at 2,500 dollars. All yen conversions use 1 dollar = 150 yen, with 1 lot assumed to be 100,000 units for currency pairs and 100 ounces for gold.
| Instrument and lot size | Trade value (in yen) | 1:100 | 1:500 | 1:1000 | 1:2000 |
|---|---|---|---|---|---|
| USD/JPY 0.01 lot | 150,000 yen | 1,500 yen | 300 yen | 150 yen | 75 yen |
| USD/JPY 0.1 lot | 1,500,000 yen | 15,000 yen | 3,000 yen | 1,500 yen | 750 yen |
| USD/JPY 1 lot | 15,000,000 yen | 150,000 yen | 30,000 yen | 15,000 yen | 7,500 yen |
| EUR/USD 0.01 lot | 165,000 yen | 1,650 yen | 330 yen | 165 yen | 82.5 yen |
| EUR/USD 0.1 lot | 1,650,000 yen | 16,500 yen | 3,300 yen | 1,650 yen | 825 yen |
| EUR/USD 1 lot | 16,500,000 yen | 165,000 yen | 33,000 yen | 16,500 yen | 8,250 yen |
| XAUUSD 0.01 lot | 375,000 yen | 3,750 yen | 750 yen | 375 yen | 187.5 yen |
| XAUUSD 0.1 lot | 3,750,000 yen | 37,500 yen | 7,500 yen | 3,750 yen | 1,875 yen |
| XAUUSD 1 lot | 37,500,000 yen | 375,000 yen | 75,000 yen | 37,500 yen | 18,750 yen |
※ Assumptions: USD/JPY 150 yen, EUR/USD 1.10, XAUUSD 2,500 dollars, 1 dollar = 150 yen. These are theoretical values assuming 1 lot = 100,000 units for currency pairs and 100 ounces for gold. In practice, maximum leverage and contract size differ by broker, account type and instrument. Gold may have a lower cap than currency pairs, and leverage may be reduced in stages depending on the equity in your account.
How to read and use the chart
- Compare it with your account balance and check what percentage of the balance the required margin for your intended lot size would be
- The larger that percentage, the less adverse movement it takes for the margin level to fall
- At 1:1000 leverage, 1 lot of USD/JPY is 15,000 yen. Work out the adverse move to stop out using the formula in the separate column
- If the USD/JPY rate moves, the yen value of required margin on dollar-denominated instruments also changes
- Some brokers automatically lower leverage depending on position size or account funds, so for larger lot sizes required margin will be higher than in the chart
The chart above shows theoretical values from the formulas and does not include spread, commission, swap or rate movements. Actual required margin is shown on the new order screen of your trading platform (MT4/MT5) and in your account information, so always check it before placing an order.
Gold (XAUUSD): pip, lot and required margin calculation
Unlike currency pairs, the definition of 1 pip for gold (XAUUSD) differs by broker. The smallest decimal unit in MT4/MT5 (0.01 dollars) is called 1 point; some brokers treat 0.1 dollars as 1 pip, while others treat 1 dollar as 1 pip. For this reason, with gold it is less error-prone to calculate profit and loss from how many dollars the price has moved, rather than how many pips.
If 1 lot = 100 ounces, a 1 dollar move in price is a profit or loss of 100 dollars (15,000 yen at 1 dollar = 150 yen). For 0.1 lot (10 ounces) that is 1,500 yen, and for 0.01 lot (1 ounce) it is 150 yen.
| Price move | 0.01 lot (1 ounce) | 0.1 lot (10 ounces) | 1 lot (100 ounces) |
|---|---|---|---|
| 1 dollar | 150 yen | 1,500 yen | 15,000 yen |
| 10 dollars | 1,500 yen | 15,000 yen | 150,000 yen |
| 50 dollars | 7,500 yen | 75,000 yen | 750,000 yen |
※ 100 ounces per lot is common for gold, but it may differ by broker and account type. The yen conversion uses a fixed 1 dollar = 150 yen and does not include spread or commission.
Because the price of gold itself is high, required margin is larger than for currency pairs at the same lot size. At 2,500 dollars, the trade value of 1 lot is 250,000 dollars (37,500,000 yen), and at 1:1000 leverage required margin is 37,500 yen. That is 2.5 times the required margin for 1 lot of USD/JPY (15,000 yen).
Gold can move by tens of dollars in a day. Even at 0.1 lot, an adverse move of 10 dollars means 15,000 yen, and at 1 lot the difference in profit or loss is 150,000 yen. The basic approach is to check how it moves starting from 0.01 lot and to decide your lot size on the assumption of a full day's price range.
How to work back to an appropriate lot size from your stop-loss distance
Lot size should be decided by working back from the loss you can accept, not as the maximum you can open with spare margin. The steps are simply to decide the acceptable loss, the stop-loss distance and then the profit or loss per pip. What follows is a worked example only and does not recommend any particular risk percentage.
- 01Decide the acceptable loss
Decide the amount you are prepared to lose on one trade. Example: with an account balance of 300,000 yen, an acceptable loss of 2% per trade is 6,000 yen.
- 02Decide the stop-loss distance (pips)
This is the distance from your entry price to where you place the stop-loss order. Example: 30 pips (0.30 yen) on USD/JPY.
- 03Work back to the profit or loss per pip
Acceptable loss / stop-loss distance = 6,000 yen / 30 pips = 200 yen per pip.
- 04Convert to a lot size
For USD/JPY, 1 pip on 1 lot is 1,000 yen, so 200 yen / 1,000 yen = 0.2 lot. As a check, 0.2 lot x 30 pips x 1,000 yen = 6,000 yen, which matches.
- 05Check required margin
For 0.2 lot of USD/JPY (150 yen), required margin is 3,000 yen at 1:1000 leverage and 30,000 yen at 1:100. Check that you have enough room relative to your balance.
When spreads widen or during economic releases, execution can slip (slippage) even if you have placed a stop-loss order. Allow for the possibility that the actual loss is larger than the acceptable loss in your calculation by keeping the lot size conservative.
- Acceptable loss (yen) / stop-loss distance (pips) / profit or loss per pip on 1 lot = appropriate lot size
- Keep the appropriate lot size within the minimum and maximum lot sizes of your trading platform
- After deciding the lot size, check required margin and margin level
- For gold, work out the loss as the dollar distance to your stop-loss x contract size, not in pips
Many offshore forex brokers offer negative balance protection (zero cut), under which a negative balance is covered, but the risk of losing the funds you deposited does not change. Conditions and exceptions differ by broker's terms. Forex is a form of trading in which you can incur losses.
Frequently asked questions
Q. How do I calculate pips in forex?
A. Divide the difference between the closing rate and the entry rate by the value of 1 pip. For USD/JPY 0.01 yen is 1 pip, and for EUR/USD 0.0001 dollars is 1 pip. Profit or loss is pips x value of 1 pip x units traded, so for 1 lot (100,000 units) of USD/JPY it is 1,000 yen per pip, and a 50-pip move is 50,000 yen.
Q. How many units is 1 lot in forex?
A. On the standard accounts of many offshore forex brokers, 1 lot of a currency pair is 100,000 units, 0.1 lot is 10,000 units and 0.01 lot is 1,000 units. Depending on the account type, such as a cent account, 1 lot may be 1,000 units, so check the contract size on your trading platform. Other instruments such as gold have different contract sizes.
Q. How is required margin calculated at offshore forex brokers?
A. It is calculated as lots x units per lot x rate / leverage. For example, buying 1 lot of USD/JPY at 150 yen with 1:1000 leverage gives 15,000,000 yen / 1,000 = 15,000 yen. For dollar-denominated instruments, multiply the dollar amount by a yen conversion rate (1 dollar = 150 yen in this article).
Q. How much is the required margin for 1 lot at 1:1000 leverage?
A. It is 15,000 yen for USD/JPY at 150 yen, 16,500 yen for EUR/USD at 1.10 (converted at 1 dollar = 150 yen) and 37,500 yen for gold at 2,500 dollars (if 1 lot = 100 ounces). It is ten times that at 1:100 and half at 1:2000. Actual maximum leverage differs by broker, account and instrument.
Q. How many dollars is 1 pip in gold (XAUUSD)?
A. The definition differs by broker: some treat 0.1 dollars as 1 pip and others treat 1 dollar as 1 pip. To avoid confusion, it is safest to calculate from how many dollars the price has moved instead of pips. If 1 lot is 100 ounces, a 1 dollar move is a profit or loss of 100 dollars (15,000 yen at 1 dollar = 150 yen).
Q. How should I decide my lot size?
A. Work back from the loss you can accept and your stop-loss distance. Acceptable loss / stop-loss distance (pips) / profit or loss per pip on 1 lot gives the appropriate lot size. For example, with an acceptable loss of 6,000 yen, a 30-pip stop-loss and USD/JPY, 6,000 / 30 / 1,000 = 0.2 lot. Decide the risk percentage according to your own financial situation.
Sources and conditions
- Basic forex terms and how it works (beginner guide, verified on 10 October 2026) →
- Leverage and stop out basics (beginner guide, verified on 10 October 2026) →
- Offshore forex stop out calculation: how to work out margin level and levels by broker (column, verified on 10 October 2026) →
- Offshore forex leverage comparison (column, verified on 10 October 2026) →
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