Pip Value Calculator
In forex trading, knowing the value of a pip is important for figuring out how risky something is and how much money you might make or lose. The pip value shows how much money one pip change in a currency pair is worth.
Case 1: Deposit currency is same as Quote Currency
It’s easy to figure out the pip value when the deposit currency and the quote currency are the same. Let’s talk about this idea in more depth.
Calculation:
When the deposit currency and the quote currency are the same, the trade size alone determines the pip value. For example, let’s consider a scenario where the deposit currency and the quote currency are both USD, and the trader is trading the EUR/USD currency pair.
Example:
- Deposit Currency: USD
- Currency Pair: EUR/USD
- Trade Size: 1 standard lot (100,000 units)
Since 1 pip in EUR/USD is equivalent to 0.0001, and the account currency is USD, the pip value is simply equal to the trade size. In this case, the trade size is 100,000 units, which translates to $10 per pip.
Case 2 : Deposit currency is not same as Quote currency
When deposit currency is not the same as quote currency, we have a general formula for calculating it.
Calculation
Pip Value = (0.0001 * Trade Size) / Exchange Rate
Let us consider an example where the trader is trading EUR/USD currency pairs and the deposit currency is AUD.
Now, let’s assume the current exchange rate for EUR/USD is 1.1800.
Our deposit currency is AUD.
Pip Value = (0.0001 * 100,000) / 1.1800 = $8.47
Therefore, the pip value for your trade in AUD is approximately $8.47. This means that for every pip movement in the EUR/USD pair, your profit or loss will change by approximately 8.47 AUD, assuming all other factors remain constant.
This makes it easier for traders to figure out how much risk they are taking and how much money they can make. This lets them make smart decisions and manage their trades well. To trade on the forex market with confidence and accuracy, you need to know what the pip value means in these situations.
Pip Value Calculator
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