How to Calculate Pip? | Forex Factory

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How to Calculate Pip?

  • #1
  • First Post: Oct 1, 2006 12:49pm Oct 1, 2006 12:49pm
I did Read about calculating pip ,but the writer Only wrote about calculating pip with a 100,000$ Lot . This was how he Put it


Let say we are using eur/usd

0.0001 Divided by 1.2681 X 100000$ = 7.88$ per Pip (sounds fair enough)


But let say i am using a mini lot of 10000$


0.0001 divided by 1.2681 x 10000 = 0.788$ per pip? ( that would be about 70 Cents?)

And lets go Further by saying i am using a micro lot of 1000$

0.0001 Divided by 1.2681 x 1000 = 0.0788 cents per pip?? (That wouldnt even be a single cent ...Correct?)


Is this method of calculating correct ?
  • #2
  • Edited Oct 2, 2006 4:42am Oct 1, 2006 4:38pm | Edited Oct 2, 2006 4:42am
If your home currency is dollars the calculations do not appear to be correct. The following are explanations and calculations from various sources.


Diallist wrote an explanation in a previous thread in the Foxex Beginners section called Pip Value > Newbie question..., post #6.

http://www.forexfactory.com/forexfor...read.php?t=228


I also recently found this explanation posted by tsch on the Oanda forum:

MANUAL CALCULATION OF PIP VALUE

-assumes USD is the home currency (if it's not, substitute your home currency in every instance where 'USD' appears).

-in EUR/USD, EUR = 'base currency', USD = 'quote currency', as in all other pairs & crosses.

TO CALULATE:

1)If USD is the quote currency, e.g. EUR/USD:
pip value = 0.0001 x units

2)If USD is the base currency, e.g. USD/CHF:
pip value = 0.0001 x units/quote

3)If it's a cross with no USD, e.g. EUR/GBP:
pip value = 0.0001 x units x quote currency quote (GBP/USD).
-For a pair like EUR/CHF, the quote currency is not offered by Oanda in the form of xxx/USD, therefore use 1/(USD/CHF) for the quote currency quote in the forumula.

NOTE: with some pairs a multiplier other than 0.0001 must be used (e.g. if JPY is the quote currency the multiplier is 0.01). Oanda's rate/spread table may be checked to note which pairs & crosses do not have 1/10,000 of a quote currency unit as the pip. If in doubt use the formula as given and check the answer against the pip value given on a market order, seeing how many places you need to move the decimal to match it, and adjust the multiplier for future manual calculations with that pair).

Confirm the validity of each formula using the pip value shown on a market order.

<SMALL>[ July 30, 2006, 08:26 PM: Message edited by: tsch ]</SMALL>
<SMALL></SMALL>


There are several sites which give regularly updated tables of current values but if you have MT4 you can upload an excellent spreadsheet prepared by Compro99. It is located in the Position Sizing Excel thread in the Forex Discussion section.

http://www.forexfactory.com/forexfor...ead.php?t=8488

Using DDE it calculates the pip values that change dynamically. I found it really helpful to my understanding of Position Sizing and Pip Values to explore this spreadsheet with the aid of Diallist's sticky on Money Management.

I have attached an image of the Pip Values from that spreadsheet.
Attached Image
  • #3
  • Oct 1, 2006 7:11pm Oct 1, 2006 7:11pm
I suppose it is a good idea to know the manual calculations, but I just look at the dealing rates on my broker's software. (FXCM in this example)

I'm willing to bet that most brokers will offer this information (pip cost) so that you can plan your trade. That is, unless you're using some weird nuts broker like easyforex.
Attached Image
  • #4
  • Oct 22, 2006 4:13am Oct 22, 2006 4:13am
Quoting hapalkos
If your home currency is dollars the calculations do not appear to be correct. The following are explanations and calculations from various sources.


Diallist wrote an explanation in a previous thread in the Foxex Beginners section called Pip Value > Newbie question..., post #6.

http://www.forexfactory.com/forexfor...read.php?t=228


I also recently found this explanation posted by tsch on the Oanda forum:

MANUAL CALCULATION OF PIP VALUE

-assumes USD is the home currency (if it's not, substitute your home currency in every instance where 'USD' appears).

-in EUR/USD, EUR = 'base currency', USD = 'quote currency', as in all other pairs & crosses.

TO CALULATE:

1)If USD is the quote currency, e.g. EUR/USD:
pip value = 0.0001 x units

2)If USD is the base currency, e.g. USD/CHF:
pip value = 0.0001 x units/quote

3)If it's a cross with no USD, e.g. EUR/GBP:
pip value = 0.0001 x units x quote currency quote (GBP/USD).
-For a pair like EUR/CHF, the quote currency is not offered by Oanda in the form of xxx/USD, therefore use 1/(USD/CHF) for the quote currency quote in the forumula.

NOTE: with some pairs a multiplier other than 0.0001 must be used (e.g. if JPY is the quote currency the multiplier is 0.01). Oanda's rate/spread table may be checked to note which pairs & crosses do not have 1/10,000 of a quote currency unit as the pip. If in doubt use the formula as given and check the answer against the pip value given on a market order, seeing how many places you need to move the decimal to match it, and adjust the multiplier for future manual calculations with that pair).

Confirm the validity of each formula using the pip value shown on a market order.

<SMALL>[ July 30, 2006, 08:26 PM: Message edited by: tsch ]</SMALL>
<SMALL></SMALL>


There are several sites which give regularly updated tables of current values but if you have MT4 you can upload an excellent spreadsheet prepared by Compro99. It is located in the Position Sizing Excel thread in the Forex Discussion section.

http://www.forexfactory.com/forexfor...ead.php?t=8488

Using DDE it calculates the pip values that change dynamically. I found it really helpful to my understanding of Position Sizing and Pip Values to explore this spreadsheet with the aid of Diallist's sticky on Money Management.

I have attached an image of the Pip Values from that spreadsheet.
Excellent Post....thanks for sharing!
"To Be A Successful Forex Trader, You Need A Successful Forex Mentor."
  • #5
  • May 6, 2009 12:59am May 6, 2009 12:59am
Thank you for your information. I'm glad i'm join this forum.

Different broker have different calculation and spread. By reading this post i could calculate how much i lost or profit. Yesterday my trade just goes blind. Whenever profit I take it. Whenever lost, I cut it. Now i get better understanding where the numbers come from.

One more question.... about swap. Do u know the effect of swap calculation to my profit loss ? thank you.
  • #6
  • May 6, 2009 5:54am May 6, 2009 5:54am
Quoting wondercorn
Thank you for your information. I'm glad i'm join this forum.

Different broker have different calculation and spread. By reading this post i could calculate how much i lost or profit. Yesterday my trade just goes blind. Whenever profit I take it. Whenever lost, I cut it. Now i get better understanding where the numbers come from.

One more question.... about swap. Do u know the effect of swap calculation to my profit loss ? thank you.
Here are some other links that might help you:
Spread, lots, leverage etc explained: http://www.forexfactory.com/showthre...85#post2285285
Free TA resources: http://www.forexfactory.com/showthread.php?t=106577
Babypips school: http://www.babypips.com/school/

Re your question on swap: http://www.ibfx.com/tools/swaprates.aspx
  • #7
  • May 6, 2009 5:56am May 6, 2009 5:56am
Quoting -KeiSuke-
I did Read about calculating pip ,but the writer Only wrote about calculating pip with a 100,000$ Lot . This was how he Put it


Let say we are using eur/usd...
Hey Dude!

The last one 0.0788 ..its actually seven cents.....
  • #8
  • Edited 2:45pm Nov 11, 2010 2:39pm | Edited 2:45pm
Hallo Traders, I requesting you all if, any one knows which currency pair having highest pip value in USD. Pl see the below snapshot for your reference. It is true that EUR/GBP is highest ($16.1210) pip value?

Thank you,
Attached Image (click to enlarge)
Click to Enlarge Name: higest pip value.JPG Size: 83 KB
  • #9
  • Jun 29, 2016 9:44am Jun 29, 2016 9:44am
Dear All,
Is PIP amount is different if currency change?! I think that PIP is everytime constant and not related to currency that you trade. I trade USD/CAD and hunt 105 pips but just have 80US$ with 0.1 lot!!! why?? Anybody can describe me?
Thank you
  • #10
  • Jul 1, 2016 5:33am Jul 1, 2016 5:33am
Quoting omidyavari
I think that PIP is everytime constant and not related to currency that you trade. I trade USD/CAD and hunt 105 pips but just have 80US$ with 0.1 lot!!! why??
Pip values are different for different currency pairs. Trading 0.1 lot USDCAD, as the quote currency is Canadian Dollar, one pips equals 1 Canadian dollar whose price was around 1.30 on 29 Jun. So 105 pips are going to net you 105 Canadian dollars, equivalent to US$80. (105 * 1 / 1.30)
  • #11
  • Jul 1, 2016 10:40pm Jul 1, 2016 10:40pm
Thank You GnWFX,
It seems that above that all pairs which second item is US $, same as GBP/USD, pip is 1$, is it correct? so it is better to trade those pairs!
Regards,
Omid
  • #12
  • Jul 2, 2016 4:34am Jul 2, 2016 4:34am
Quoting omidyavari
Thank You GnWFX, It seems that above that all pairs which second item is US $, same as GBP/USD, pip is 1$, is it correct? so it is better to trade those pairs! Regards, Omid
It doesn't really matter what the pipvalue of a currency pair is as far as profitable trading is concerned. Some currency pairs have smaller pipvalue (GBPAUD, EURAUD - $7.49/pip per lot currently; or GBPNZD, EURNZD - $7.17/pip per lot, etc.) but move around quite a lot, and so are likely to give better return than some slow movers like NZDUSD or USDCHF.

The highest pipvalue is for EURGBP ($13.27/pip per lot) and it has a 20 day average trading range (129 pips) higher than EURUSD (117 pips) so would give you better ROI than EURUSD.

The current champion, topping the list in terms of ROI is GBPJPY (405 pips 20 day average trading range with pipvalue of $9.76/lot.)

Happy Trading.
  • #13
  • Jul 3, 2016 1:30am Jul 3, 2016 1:30am
Thank you GNWFX
  • #14
  • Jul 16, 2016 9:03am Jul 16, 2016 9:03am
What is this?
  • #15
  • Edited 12:32pm Feb 15, 2018 12:16pm | Edited 12:32pm
Hi all,

Ive done up a spreadsheet that calculates pip values for 30 odd pairs using open office.
It is based on AUD deposit currency though.
Im no spreadsheeter by any means but i had a go using info from alpari here. https://alpari.com/en/faq/trading_te..._value_of_pip/
Not finished yet but it works
you need ur mt4 open to get the data to update the sheet
you will also need to adjust the formula in column E to your own deposit currency
stop loss is worked out from the i j k columns
when u download the xls file u will need to save it as something else when u want to change anything as it is a read only file
might help some of you out
Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot1.png Size: 92 KB
Attached File(s)
File Type: xls pipsperlot.xls   26 KB | 862 downloads
  • #16
  • Last Post: Feb 16, 2018 8:30pm Feb 16, 2018 8:30pm
A pip measures the amount of change in the exchange rate for a currency pair and is calculated using last decimal point.
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