subject: Calculate the value of Forex Pips [print this page] We are all used in dollars and cents (as usual, the currency of your country), but when you enter the Forex market, you have to learn a new term: Pip. What does this mean and how do I calculate a value of Pips Forex?
Pip
The PIP is the smallest increment a currency can be defined. For example, for the USD / CAD is a Pip 0.0001. For the USD / JPY one pip is 0.01. A Pip is also named as one point.
Recently changed many Forex brokers offer a price a summons to four digits to five digits. This changed almost the smallest increment a currency pair can move, but stayed the same seeds.
It was a trick you can use with 5 points subpoena to know what a pip, but it does not work every time you more:
The trick is simple: Take the exchange rate and the number of five digits backward. For example, today, the USD / CAD is at 1.04328 (5-digit price). Remember, the first 5 digits: 1, 0, 4, 3, 2 The 2 is the fifth Agent in charge, and in the fourth Position after the decimal point, so a pip for the USD / CAD is 0.0001. This is true also for the EUR / GBP, EUR / USD and many other currency pairs.
For the USD / JPY is a different story. The USD / JPY exchange rate has historically been more than 100 yen to the dollar. Therefore, the value of the PIP for the USD / JPY is 0.01. However, the dollar weakened against the yen in value today it stands at 86.693. Although a pip is always 0.01, because this used to be the fifth in the currency of the listing. This is true also for the CHF / JPY and other currencies with the yen.
Another way is to simply know whether your broker is running four quotes figures (in this case, the PIP is the last digit) or 5 quotes figures (in this case, the PIP in the provisional final position).
To calculate the value of a pip
A pip is always calculated from the reference currency (the second of the pair). This number is the size of the property, multiplied with which you trade. For the standard batch of 100,000 units, the value of the MIP for the USD / CAD is $ 10 CAN or $ 9.59 (depending on exchange rate of $ 1.04328 today / CAD). This is the calculation: 10 CAD / 1.04328 = $ 9.59.
For the EUR / USD for the value of a pip is $ 10, which is pretty simple. For all standard lots, if the dollar is the base currency of a PIP $ 10.
For many mini with only 10,000 units, the PIP will be 10 times less, or $ 1 for the EUR / USD and $ 0.959 for the USD / CAD.
It is important to calculate the value of a pip Forex. Still, the basic concept in the world of forex trading.
