How much is a pip worth in forex trading?
Generally speaking, one pip equals 0.0001 of most exchange rates. A pip stands for a percentage in point. If, for example, the exchange rate of the EURUSD increases from 1.1000 to 1.1001, then it has increased by one pip. The value of a pip depends on the lot size of your trade, and the specific exchange rate you are using.
If you have bought a standard contract of EURUSD (standard lot), then if the exchange rate moves 1 pip in your favor you would gain $10. The same applies for GBPUSD. The value of a pip varies in pairs in which the USD is not the denominator. For example, when trading the USDJPY, the value of one pip for one standard lot when the exchange rate is 110, is 110 yen. In any pair, the first currency is the base currency and the second currency is the price or quote currency. Usually, the value of a pip is calculated in the price currency. For example, for GBPCAD, the value of a pip is calculated based on the exchange rate of the GBPCAD. If you have a USD-based trading account, the value is then converted from CAD to USD using the current USDCAD exchange rate. This is done automatically by your trading platform.
Forex Peace Army offers you a pip calculator that helps you calculate the value of a pip based on the pair you are trading, the lot size, and the currency of your account. You simply enter all the details and the results come out for each pair.
If you have bought a standard contract of EURUSD (standard lot), then if the exchange rate moves 1 pip in your favor you would gain $10. The same applies for GBPUSD. The value of a pip varies in pairs in which the USD is not the denominator. For example, when trading the USDJPY, the value of one pip for one standard lot when the exchange rate is 110, is 110 yen. In any pair, the first currency is the base currency and the second currency is the price or quote currency. Usually, the value of a pip is calculated in the price currency. For example, for GBPCAD, the value of a pip is calculated based on the exchange rate of the GBPCAD. If you have a USD-based trading account, the value is then converted from CAD to USD using the current USDCAD exchange rate. This is done automatically by your trading platform.
Forex Peace Army offers you a pip calculator that helps you calculate the value of a pip based on the pair you are trading, the lot size, and the currency of your account. You simply enter all the details and the results come out for each pair.