The forex pip formula

Market Analysis

The standard pip value for the USD-based account and the USD-based currency pairs (EUR/USD, GBP/USD, AUD/USD, etc.) is $10 for the standard lot. But many beginning Forex traders soon stumble upon the non-USD currency pairs (USD/JPY, USD/CHF or more difficult – EUR/JPY, EUR/CHF) or the non-dollar based accounts. In all those cases, the value of a single pip for your positions isn’t obvious. Here’s simple formula to calculate the pip value in all possible cases.

Determine your account’s currency (in about 90% cases it’s USD). If it’s the same currency as the based currency of the pair (the second one, which goes after “/”).

If the account’s currency is different from the base currency but is the same as the currency pair’s long currency (the first one, which goes before “/”) then check this currency pair’s current Ask rate (the highest of the rates)

If the account’s currency is different from any of the currencies from the pair of the position, you have to check the current rate of this currency relative to the base currency of the pair:

If the currency pair combined of the account’s currency and the base currency of the position has the account’s currency as the base currency (second, after “/”) then you should check and remember its current Bid rate (the lowest of the rates).

If the currency pair combined of the account’s currency and the base currency of the position has the account’s currency as the long currency (first, before “/”) then you should check and remember its current Ask rate (the highest of the rates).

You should simply multiply the amount of currency units in your position (100,000 for 1 standard lot) by the size of one pip (0.0001 for almost all pairs and 0.01 for almost all pairs based on JPY). You’ll get a pip value of 10 currency units per 1 standard lot.

You should multiply the amount of currency units in your position (100,000 for 1 standard lot) by the size of one pip (0.0001 for almost all pairs and 0.01 for almost all pairs based on JPY) and then divide the result by the Ask rate.

You should multiply the amount of currency units in your position (100,000 for 1 standard lot) by the size of one pip (0.0001 for almost all pairs and 0.01 for almost all pairs based on JPY) and either multiply the result by the Bid rate or divide the result by the Ask rate.

Some examples:

The easiest case: USD account and EUR/USD position of 1 standard lot

100,000 x 0.0001 = 10 (USD).

The medium difficulty: EUR account and EUR/USD position of 1.5 standard lots 150,000 x 0.0001 = 15; 15 / 1.3449 = 11.15 (EUR).

The difficult case: JPY account and EUR/USD position of 0.7 standard 70,000 x 0.0001 = 7; 7 * 92.51 = 647.57 (JPY).