What are Pips in Forex? – Pip Value Calculator

In this Post, I will give you a brief information about what are pips in Forex? And also teach you how to calculate pip value? It is very important for newbies to understand what pips exactly are? and how we can measure the pip value? Please take a look at below to learn more. The Pip stands for = “price interest point.” A pip calculates the number of movement of the market price rate on a forex currencies. Forex market currencies shown 4 decimal digits and some Brokers offer 5 Digits, 1 pip is just the same as 0.0001.

Example: EURUSD Current Price 1.0658 then Market move down until 1.0657.

So, Current Price  1.0658

Move down until    1.0657

Difference         0.0001<=== One PIP

so, the minimum price movement of the market is called PIP, OR the difference of the 4th decimal number of the market is called PIP

                        OR

So, Current Price  1.0658

Move down until    1.0655

Difference         0.0003<=== Three PIPS

If broker offer Five decimal numbers like 1.06588in this Condition, it will be like this,

So, Current Price   1.06588

Move down until     1.06587

Difference        0.00001<=== One Point not one PIP, one PIP is always 4th decimal number and movement of 5th decimal number is always called point.

So, Current Price  1.06588

Move down until    1.06577

Difference:        0.00011<=== the first ‘1’ is One POINT and another ‘1’ is 1 pip.

The yen-based pair of currencies has the different, as they are shown just 2 decimal points (0.01). Many Forex Brokers currently provide fractional pips to give an additional point of detail when quoting forex market prices for the specific pair of currencies. A fractional pip is equal to 1/10 of a pip.

Example:

So, Current Price  1.022

Move down until    1.033

Difference         0.011<=== first ‘1’ is One POINT and another ‘1’ is 1 PIP

Now it’s time to show you how to calculate pip value in forex. 

Formula: Per Pip Value = Lot X Contract Size X Minimum Fluctuation Price of the Pair

You can get the Minimum Fluctuation Price for all pairs from the broker you trade with.

Value of 1 pip in EUR/USD = 1 Lot (100 000 €) X 0.0001= 10 USD

Value of 1 pip in USD/CHF= 1 Lot (100 000$) X 0.0001= 10 CHF

Value of 1 pip in EUR/JPY=1 Lot (100 000 €) X 0.01= 1000 JPY

Answer is always in Quote currency means 2nd Currency of the pair

For Micro or Mini Account just need to change the Contract Size only.

Standard Account Contract size    > 100,000

Mini Account Contract size    > 10,000

Micro account Contract size    > 1,000

FINAL WORDS: