Cross currency pip value... ??
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  1. #1
    moon47usaco is offline Newbie
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    Default Cross currency pip value... ??

    Using the below examples and the order of math how do we calc the value for a USD account trading a pair that does not contain the USD as in the EUR/CHF or other cross currencies... ??

    How do i use a USD quoted EUR/USD or a non USD quoted USD/CHF to convert the pip value into USD... ??

    Please use the "(tick/quote) x lot" order of math like the USD/XXX pairs in the example below instead of the tick*lot/quote as it makes more sense to me... =]

    TY

    Let's assume we will be using a 100,000 unit (standard) lot size. We will now recalculate some examples to see how it affects the pip value.

    USD/JPY at an exchange rate of 119.80 (.01 / 119.80) x 100,000 = $8.34 per pip
    USD/CHF at an exchange rate of 1.4555 (.0001 / 1.4555) x 100,000 = $6.87 per pip
    In cases where the U.S. dollar is not quoted first, the formula is slightly different.

    EUR/USD at an exchange rate of 1.1930 (.0001 / 1.1930) X 100,000 = 8.38 x 1.1930 = $9.99734 rounded up will be $10 per pip
    GBP/USD at an exchange rate or 1.8040 (.0001 / 1.8040) x 100,000 = 5.54 x 1.8040 = 9.99416 rounded up will be $10 per pip.

  2. #2
    rhodytrader's Avatar
    rhodytrader is offline FX-Men Honorary Member
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    The value of the position will be determined by the USD rate vs. the base currency. The math is simple. If you're trading EUR/CHF, for example, the value of the position is EUR/USD x the trade size.

    Thus, if you're long 100,000 EUR/CHF and EUR/USD is quoted at 1.40, the position value is:

    100,000 x $1.40 = $140,000

    Now, if you're talking about pip values, you need to use the quote currency against the dollar. Again, using the EUR/CHF example, that means taking the EUR/CHF pips made or lost and dividing by USD/CHF.
    Last edited by rhodytrader; 11-22-2011 at 08:04 AM.
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  3. #3
    moon47usaco is offline Newbie
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    So i am refering to pip value...

    in the example:
    USD/CHF at an exchange rate of 1.4555 (.0001 / 1.4555) x 100,000 = $6.87 per pip
    Trading the USD/CHF will give me a profit/loss of $6.87 per pip on a standard lot.

    Are you saying that trading EUR/CHF will be the same $6.87 per pip... ??

    Also how can i use the EUR/USD to convert the EUR/CHF pip value to USD amount... ??

  4. #4
    rhodytrader's Avatar
    rhodytrader is offline FX-Men Honorary Member
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    Follow the same formula, but think in EUR terms rather than USD. Thus, EUR/CHF at an exchange rate of 1.2000 (0.0001/1.2000) x 100,000 = EUR8.33 per pip. Multiply that by EUR/USD and you get $/pip. If EUR/USD is 1.4 then it's $11.67 per EUR/CHF pip.

    That's unnecessarily complicated, though, because you're doing two calculations - first to convert CHF into EUR and then to convert EUR in to USD. EUR/CHF gains or losses are valued in CHF pips, so if you just divide that by USD/CHF you get the same answer.
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