Calculation of pip value
Let's say that the exchange rate of GBP/USD is 1.25.
If it goes up 1 pip the value is 1.2500 + 0.0001 = 1.2501.
Let's say you are trading 1 Lot(I.e 100 000 units of currency).
To calculate the pip value you divide 1 pip by the exchange rate.
Thus ⇒ 0.0001/1.25
And multiply it by the number of currency in which in this case is 125 000 dollar.
Since 100 000 units of GBP currency cost 125 000 dollar(which is the deposit currency)
Thus ⇒ (0.0001/1.25)* 125 000
⇒ (0.00008)*125 000 = 10 dollar.
So for every pip your trade goes your way, you earn 10 dollar.
Let's say you aim for 10 pip scalp ⇒ 10 pip * 10 dollar = 100 dollar.
Meaning your pip value was: 10 dollar. And your profit was 100 dollar.
Note(!): If your deposit currency is GBP it would be (0.0001/1.25)*100 000, since 1 lot is worth 100 000 GBP
while in 1 lot if deposit currency is USD is worth 125 000 dollar.
Let's say that the exchange rate of GBP/USD is 1.25.
If it goes up 1 pip the value is 1.2500 + 0.0001 = 1.2501.
Let's say you are trading 1 Lot(I.e 100 000 units of currency).
To calculate the pip value you divide 1 pip by the exchange rate.
Thus ⇒ 0.0001/1.25
And multiply it by the number of currency in which in this case is 125 000 dollar.
Since 100 000 units of GBP currency cost 125 000 dollar(which is the deposit currency)
Thus ⇒ (0.0001/1.25)* 125 000
⇒ (0.00008)*125 000 = 10 dollar.
So for every pip your trade goes your way, you earn 10 dollar.
Let's say you aim for 10 pip scalp ⇒ 10 pip * 10 dollar = 100 dollar.
Meaning your pip value was: 10 dollar. And your profit was 100 dollar.
Note(!): If your deposit currency is GBP it would be (0.0001/1.25)*100 000, since 1 lot is worth 100 000 GBP
while in 1 lot if deposit currency is USD is worth 125 000 dollar.
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1
. I like to think about it in a simple way. If we are trading 1 lot gbp/usd, we are buying/selling gbp with usd, so 1 pip will cost 10 usd. Now you just need to convert these 10 usd into your account currency. If your account is in gbp then 1 pip will cost 10/1.25 = 8 gbp. If your account is in eur then 1 pip will cost 10/1.1 = 9.09 eur.