Hi, I am new to this and am trying to come to grips with how PIP value is calculated.

For anything ending in USD 1 PIP = $1 that much I have worked out. Therefore it is fairly logical to extrapolate anything where the base currency is USD (USD/*). The money management forum goes into great detail on this.

Now what about other pairs, i think they are called Cross Rates? In particular I am interested in the NZD/JPY.

From my understanding the PIP value is determined by the USD value.

This in effect would mean that the PIP value changes with every tick! Is this correct?

Now the only reason it is tied to the USD value is because the base account which my money is stored in is in USD$. If my money was in NZD$ (for which I have failed to find a broker) then the PIP value for NZD/JPY would be constant as it is for all USD/* and */USD pairs.

Is this correct?

This appears to make it quite challenging to calculate your risk management calculations and your money management rules with any degree of certainty unless you are trading */USD or USD/* pairs.

Have I got this correct, or am I missing something fundamental?

Thanks.

Womble

For anything ending in USD 1 PIP = $1 that much I have worked out. Therefore it is fairly logical to extrapolate anything where the base currency is USD (USD/*). The money management forum goes into great detail on this.

Now what about other pairs, i think they are called Cross Rates? In particular I am interested in the NZD/JPY.

From my understanding the PIP value is determined by the USD value.

This in effect would mean that the PIP value changes with every tick! Is this correct?

Now the only reason it is tied to the USD value is because the base account which my money is stored in is in USD$. If my money was in NZD$ (for which I have failed to find a broker) then the PIP value for NZD/JPY would be constant as it is for all USD/* and */USD pairs.

Is this correct?

This appears to make it quite challenging to calculate your risk management calculations and your money management rules with any degree of certainty unless you are trading */USD or USD/* pairs.

Have I got this correct, or am I missing something fundamental?

Thanks.

Womble