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Pip Value Question

  • #1
  • First Post: Jan 17, 2006 2:38pm Jan 17, 2006 2:38pm

Earlier today I opened 2 positions in the same account at the same time(both .2 lots):

  1. Long GBP/USD, opened at 1.7630. Soon after, the current price was 1.7624, a difference of 6 pips, with a loss showing of $(12.00).
  2. Short EUR/GBP, opened at .6842. Soon after, the current price was .6857, a difference of 15 pips, with a loss showing of $(52.89). My observation was that the EUR/GBP had 60% more loss in the number of pips than the GBP/USD, but there was 75% more loss in the dollar amount. I contacted the broker and asked about this and was told the reason due to different pip values for the currency pairs. The rep. went on to explain how to calculate the pip values for each pair. I said I don't have time to calculate pip values before I place a trade due to fast moving markets. I asked why the pip values for each pair are not listed on the dealing rates page. The rep. replied that that feature is not available now, but will be a future upgrade. My questions about this are 1) why do currenciy pairs have different pip values? 2) are pip values the same regardless of the broker you use? 3) are there any brokers that list pip values in one place on their dealing rates page? 4) do pip values for each pair change frequently, or are they fixed? 5) are pip values correlated to the spread of currency pairs? 6) is there a web-site that has real-time pip values, and if so, what is it? It is a good thing I am still demo trading, as I would have got burned on this if I were trading more lots. Any other comments about this appreciated.

  • #2
  • Jan 18, 2006 10:03pm Jan 18, 2006 10:03pm
http://www.forexfactory.com/forexfor...&highlight=pip

If not, I'll take a stab at them all here....can someone audit my answers?

1) currency pairs have different pip values because they trade at different prices....some are static, others are dynamic, see linked thread w/explanation from dial....

2) yes

3) i use GFT and they have a pip calculator that will do it for you based on current price, it's a really simple calculation to do with excel (again see dial's example on linked thread)

4) see answer #1

5) no

6) i personally never had the need with my broker having a calculator
  • #3
  • Jan 18, 2006 10:13pm Jan 18, 2006 10:13pm
Quoting mmills4x

Earlier today I opened 2 positions in the same account at the same time(both .2 lots):

  1. Long GBP/USD, opened at 1.7630. Soon after, the current price was 1.7624, a difference of 6 pips, with a loss showing of $(12.00).
  2. Short EUR/GBP, opened at .6842. Soon after, the current price was .6857, a difference of 15 pips, with a loss showing of $(52.89). My observation was that the EUR/GBP had 60% more loss in the number of pips than the GBP/USD, but there was 75% more loss in the dollar amount. I contacted the broker and asked about this and was told the reason due to different pip values for the currency pairs. The rep. went on to explain how to calculate the pip values for each pair. I said I don't have time to calculate pip values before I place a trade due to fast moving markets. I asked why the pip values for each pair are not listed on the dealing rates page. The rep. replied that that feature is not available now, but will be a future upgrade. My questions about this are 1) why do currenciy pairs have different pip values? 2) are pip values the same regardless of the broker you use? 3) are there any brokers that list pip values in one place on their dealing rates page? 4) do pip values for each pair change frequently, or are they fixed? 5) are pip values correlated to the spread of currency pairs? 6) is there a web-site that has real-time pip values, and if so, what is it? It is a good thing I am still demo trading, as I would have got burned on this if I were trading more lots. Any other comments about this appreciated.

Mike;

If you have FXCM's platform (I do, but I don't like FXCM and don't use them for trading) the pip values are shown for all the pairs if you have the Dealing Rates Window set to "Standard" and not "Advanced" under "Look & Feel". The values are listed under the colume "Pip Cost". EURGBP is the highest one at: 1.76
They don't really change very much. At most I believe about a penny or two once in awhile.

JohnFX
  • #4
  • Jan 18, 2006 11:20pm Jan 18, 2006 11:20pm
Quoting mmills4x

Earlier today I opened 2 positions in the same account at the same time(both .2 lots):

 

  1. Long GBP/USD, opened at 1.7630. Soon after, the current price was 1.7624, a difference of 6 pips, with a loss showing of $(12.00).
  2. Short EUR/GBP, opened at .6842. Soon after, the current price was .6857, a difference of 15 pips, with a loss showing of $(52.89). My observation was that the EUR/GBP had 60% more loss in the number of pips than the GBP/USD, but there was 75% more loss in the dollar amount. I contacted the broker and asked about this and was told the reason due to different pip values for the currency pairs. The rep. went on to explain how to calculate the pip values for each pair. I said I don't have time to calculate pip values before I place a trade due to fast moving markets. I asked why the pip values for each pair are not listed on the dealing rates page. The rep. replied that that feature is not available now, but will be a future upgrade. My questions about this are 1) why do currenciy pairs have different pip values? 2) are pip values the same regardless of the broker you use? 3) are there any brokers that list pip values in one place on their dealing rates page? 4) do pip values for each pair change frequently, or are they fixed? 5) are pip values correlated to the spread of currency pairs? 6) is there a web-site that has real-time pip values, and if so, what is it? It is a good thing I am still demo trading, as I would have got burned on this if I were trading more lots. Any other comments about this appreciated.


mmills4x,


All currency pairs are valued in the denomination of the back pair. Crosses such as EUR/GBP are valued in GBP. So if you have a 10 pip profit in 100,000 EUR/GBP, and GBP/USD is trading at 1.76, your gain is 10 Pounds, which equals 10*1.76 *10 = US $176. The same logic would be used in EUR/JPY,except pair is valued in yen.
vegas
  • #5
  • Jan 19, 2006 1:48pm Jan 19, 2006 1:48pm
If you are trying to decide which pair to trade, does the pip value have any influence in your decision? Is it normally best to trade a pair with a low pip
value or high pip value? I have noticed the values can vary widely between different pairs, so a high pip value could be your worst enemy or your best friend, depending on which direction you place your trade.
  • #6
  • Last Post: Jan 19, 2006 10:42pm Jan 19, 2006 10:42pm
You said it yourself, a big/small pip value could be your best friend of worst enemy ;-) A pip value wouldn't influence my decision to trade, but maybe my trade size.
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