Pip | What is a pip in forex | How to calculate pip value.
Pip is the basic unit of measurement or value when a currency pair moves.
And that I talk about in the world of currency trading and it is the fourth number
after the decimal place.
Since most major currency pairs price to four decimal places, then the smallest change is that of the last decimal point.
It is the equivalent of 1/100 of one per cent or one basis point.
Therefore the smallest move the USD/CHF currency pair can make is $0.0001 or one basis point.
While It stands for “Percentage in Point.”
There are two types of currency quote standard Price and Yen Price.
The Standard Price Quote (Non-Yen)
Well, Standard Price Quotes – Currency Pairs that do not involve the Yen(JPY), have 4 or 5 decimal places.
The Standard Price Quotes (Non-Yen, four decimal places)
The GBP/USD = 1.6411.
Standard Price Quotes (Non-Yen, five decimal places)
GBP/USD = 1.63842.
In the Price of 1 GBP= 1.63 84 2
1 = the Dollar
63 = the Cents
84 = the percentage of a cent
Two = a tenth of a Percent.
Yen Price Quote.
And second, the Yen Price Quote – Currency Pairs involving the Yen(JPY), have 2 or 3 decimal places.
Yen Price Quote ( 2 decimal places).
USD/JPY = 102.33.
Yen Price Quote ( 3 decimal places).
USD/JPY = 102.334.
In the price = 102.334.
the yen = 102.
The percentage of a Yen = 33.
The tenth of a Percent = 4.
Value Calculation of it.
The Standard Price Quote ( where USD Quote Currency).
GBP/USD = 1.6413.
Formula Percentage of point = Lot Size(100,000) * Tick Size.
The Percentage of point =100,000 * 0.00001 = 10 $ per pip value.
Standard Price Quote ( where USD Base Currency).
USD /CAD= 1.1033 Current Price.
The Formula = Lot Size(100,000) * Tick Size / Current Price.
Percentage of point = 100,000 * 0.0001 / 1.1033 = 9.06 $ per pip value.
Standard Price Quote ( where USD not involve).
EUR/GBP= 0.8308 *** Base Quote EUR/USD = 1.3636.
Formula = Lot Size(100,000) * (Tick Size) * (Base Quote ) / Current Price.
The Percentage of point = 100,000 * 0.0001 * 1.3636 / 0.8308 = 16.41 $ per pip value.
Try Also Here,