Calculating pip value for EUR/USD

Beginner Questions
1

I am trying to calculate the pip value for a 5000 lot. I would like to know whether the following calculation is correct.

current price: 1.2302

pip value = 1.2302 (.0001 / 1.2302) X 5000 = 0.50 x 1.2302 = $0.61

Any help is greatly appreciated.

2

yep its correct

3

Actually, that’s incorrect.

For pairs where the USD is the quote currency, like EUR/USD, the pip value is calculated at 0.0001 x size. The current exchange rate has nothing to do with it (unless you’re looking to convert out of USD).

Thus, in the case of a 5000 EUR position, the pip value is 0.0001 x 5000 = $0.50

4

Thanks for the reply. Actually I got the calculation from the pip school @ babypips.com
The reason I asked this is I am confused with one of my trades. I opened a demo $500 account in MT5 + Alapari (1:100 leverage). I then bought EUR/USD at 1.2302 with SL @ 1.2282, TP @ 1.2322 (20 pip difference for SL and TP vs market price).
And the market went the other way and MT5 automatically deleted the trade, displaying the message not enough money.

Since I have a $500 account, according to the calculation (0.0001 x 500) = 0.05
So with this trade I am risking 20 pips (0.05 x 20) = $1

I did not have any other trades except this. Could someone explain why MT5 deleted my trade? Did I do my calculations wrong?

5

I can’t speak to why MT4 killed the trade, but could venture the guess that your had trade size too big for the money in your account. This might be related to an error you seem to be making. Pip value is not based on the money in the account. It’s based on the size of the position you take.

Also, when you are trading EUR/USD the trade is denominated in EUR, not USD. That means if you put on a 5000 position it’s value is 5000 x EUR/USD (5000 x 1.2302 in your example). Your margin requirement is based on that value.

6

I selected 0.05 as the volume when executing the order.

7

Select 0.01 & see if that works.