### What is pips in forex 7

The Definitive Guide on Forex Pip Value Calculation.

The pip value when forex trading affects how much you will make or lose, in your own currency, for each pip the price moves. Pip value is based on the lot size, the currency pair/exchange rate, and the account currency.

There is loads of misinformation and incomplete information on pip values. In this article, I will explain pip values in detail, so you understand what the pip value is, regardless of what pair you are trading, your lot size, or your account currency.

Some of this will get a little technical. But always remember, the easiest way to calculate pip value is to use a pip value calculator. I use the one on MyFxBook. Fill in your account currency (type of currency you deposited), how much you want to trade (just input 1, since the list shows the pip value for micro, mini, and standard lots), and the list fills in with the pip values for all the pairs.

If you want to understand how pip values are created, then the rest of the article is for you.

Pip Value and Account Currency.

As a refresher, a pip is a fourth decimal place in most currency pairs. It is the second decimal place in JPY currency pairs. If a firth decimal place (or third in JPY pairs) is shown, that is a fractional pip. There are 10 fractional pips to a pip.

In the screenshot above, the bid is 1.186 1 0. The underlined 1 is one pip. A move to 1.18630 is a 2 pip move. A move up to 1.18780 from 1.18610 is a 17 pip move.

Pip values are affected by your account currency. Therefore, I have broken the article down into USD Accounts and Non-USD Currency Accounts. If you have a USD account, focus on that section. If you opened your account with another currency, then that section will apply to you.

Here is a general rule about pip values:

Rule 1. If your account currency is the same as the currency listed second in the pair, then your pip value will always be fixed with that pair, it won’t change. A micro lot will be 0.10 in your account currency, a mini lot will be 1, and a standard lot will be 10. So \$0.10, \$1, \$10 for a US account, or AUD\$0.10, AUD\$1, or AUD\$10 for an Australian dollar account. If your account currency isn’t listed second in the pair, or isn’t in the pair at all (USD account trading the EUR/GBP), then the pip value will be different and will change over time.

As a refresher, a micro lot is 1,000 worth of currency, a mini lot is 10,000 worth of currency, and a standard lot is 100,000 worth of currency listed first in the pair. If you are trading the EURUSD, a standard lot is €100,000. For the GBPUSD, a standard lot is £100,000. For the USD/JPY, a standard lot is \$100,000.

Calculating Pip Value in a USD Funded Account.

With a USD dollar account (deposited US funds into your account), when you trade the EUR/USD a 1 pip move will equate to \$0.10 with a micro lot, \$1 with a mini lot, and \$10 with a standard lot. That will never change…because of the rule mentioned above. You have a USD account, and the USD is listed second in the pair. Therefore, the pip value will always be the same.

So if you sell the EURUSD at 1.16053 and the price is now 1.16003 (5 pips lower), your profit is \$50 if you had shorted 1 standard lot (5 pip move x \$10 per pip). Or you profit \$5 with a mini lot position, or \$0.50 profit with a micro lot.

Currency pairs that have the USD listed second in the pair, such as EURUSD, GBPUSD, AUDUSD, NZDUSD all have the same pip values as indicated above, assuming you have a US dollar account.

Other currency pairs have a fluctuating pip value, based on the value of the currency.

Rule 2. In a USD account, If the USD is listed first in the pair you are trading, or not at all, then you need to do a conversion. Divide \$10 (for a standard lot) by USDYYY, with YYY being the second currency of the pair you are trading.

For instance, the pip value of a mini lot (10,000) in the USDCAD is:

In other words, it’s \$1 divided by the current USDCAD rate.

The pip value for a standard lot is:

As the USDCAD appreciates, the pip value is less. If the USDCAD drops in value the pip value increases.

When trading a US account, the pip value is determined in US dollars even if you’re trading a pair that doesn’t have the USD in it. For example, if you’re trading the EURGBP the pip value of a standard lot (100,000) in US dollars is 10 / USDGBP rate. See rule 2 above.

Note: Anytime you need to flip a currency from GBPUSD to USDGBP, for example, just go: 1 / GBPUSD to get USDGBP. And 1 / USDGBP to flip back to GBPUSD.

Below is a list of the conversions for converting the pip value of a standard lot into US dollars, if you have a USD account. For example, if you want to know the pip value of the AUDCAD, you divide \$10 by the USDCAD rate, and that will give you the pip value in USD (because you have a USD account).

Notice that sometimes the chart below says multiply (*) instead of divide (/), and that is because the currency order is flipped around. You can always look up the current rate in the USDXXX order, but if you want to use XXXUSD, then you will multiply 0.1, 1, or 10 by that rate.

Remember though, this isn’t required. You can use a pip calculator as mentioned above.

Calculating Pip Value for a Non-USD Account.

If you have a non-USD account, then the same concepts apply.

If your account currency is listed second in the pair, your pip value will always be fixed at 0.1, 1, and 10 for micro, mini, and standard lots in your own account currency.

For example, if you have a Canadian dollar account, a 1 pip move in the USDCAD on a standard lot will equal a gain or loss of CAD\$10.

Rule 3. For any other account currency, if your account currency is listed first in the pair you are trading, or not at all, then you need to do a conversion. Divide 10 (for a standard lot) by YourCurrencyYYY, with YYY being the second currency of the pair you are trading.

For a Canadian account, if the CAD is listed first in a pair, or not at all, then you need to do a conversion. Divide 10 (for a standard lot) by CADYYY, with YYY being the second currency of the pair you are trading.

So if you have a CAD account, and you want to trade the USDCHF, to get the pip value, divide 10 / CADCHF to get the pip value in Canadian dollars.

Note: Anytime you need to flip a currency from GBPUSD to USDGBP, for example, just go: 1 / GBPUSD to get USDGBP. And 1 / USDGBP to flip back to GBPUSD.

The same concept applies regardless of what currency you funded your account with. If you are interested in day trading and want strategies and a method for creating an income stream in under 2 hours per day, the EURUSD Day Trading Course shows you how.

Cory Mitchell, CMT.