How do I calculate the Pip value?
You can calculate the pip value for a trade
Knowing the pip value can help you to calculate the commission per trade.
The formula is as follows:
- Instruments priced to 4 decimal places: Units X 0.0001 X conversion to USD = Pip value
- Instruments priced to 3 decimal places: Units X 0.001 X conversion to USD = Pip value
- Instruments priced to 2 decimal places: Units X 0.01 X conversion to USD = Pip value
- Instruments priced to 1 decimal place: Units X 0.1 X conversion to USD = Pip value
Instruments that have USD as the quote currency (listed second, after the base currency) do not require a conversion and therefore the ‘conversion to USD’ value will be 1.
Example 1: Let’s calculate the pip value for a GBP/USD trade with 7000 units.
GBP/USD is priced to 4 decimal places, so we multiply the number of units by 0.0001.
7000 Units X 0.0001 = 0.7
GBP/USD has USD as the quote currency, so no conversion is required.
0.7 X 1 = Pip value of $0.70
Example 2: Let’s calculate the pip value for a GBP/JPY trade with 7000 units.
GBP/JPY is priced to 2 decimal places, so we multiply the number of units by 0.01.
7000 Units X 0.01 = 70
GBP/JPY has JPY as the quote currency, so we need to convert this figure to USD, the base currency of your Monyxa account.
70 X 0.0093 (current JPY/USD exchange rate at the time of writing) = Pip value of $0.65
