What is a pip worth?
Please forgive the very basic question but I am suffering from a major brain fart and can't remember
what is a pip worth
Micro Account, Mini account, and I think for a standard account it's $10.00
Thanks for answering this question for me.
It really depends on the currency pairs that you're trading.
Originally Posted by BlkOnyx
For USD based pairs:
Micro = $0.10
Mini = $1.00
Standard = $10.00
Here's a free pip value calculator that I've used for other pairs:
Pip Value Calculator, Pip Calculator, Pip Value Information
I was wondering the same.
Why would some one buy one pair over another pair, if they both move up
the same number of pips.
Like when you buy 1,000 units of xxx for a $200 margin
and one pip is worth $ 1.50.
Now you buy another 1,000 units of yyy for a $200 margin
and one pip is worth $2.70.
Now both xxx and yyy move up 100 pips.
Is xxx worth $150 and yyy worth $270.
Why would I want to buy xxx if I am only going to win $150 compared to yyy that would win $270.
I understand if interest rates are different and spreads.
Do I have this right or am I thinking wrong?
I am still new and learning and am glad there are so many of you with so much help for others.
Yes, you're right, xxx is worth $150 and yyy is worth $270.
Originally Posted by kauaibobby
Different currencies move at different rates and it takes some currencies longer to move 100 pips than others.
Originally Posted by kauaibobby
It depends on your strategy, too. If you use the daily chart and trade once a day, then you may want the currency that is worth more (keeping in mind that it will also cost you more to get into the trade).
If you're using lower time frames and making more than one trade per day, you may want the currency that is worth less but is more volatile (moves more pips per day).
For example, EUR/USD is more of a steady currency than GBP/JPY. It's also generally worth more.
Now, if I'm doing multiple trades per day, I'll make more money with the GBP/JPY than you will doing one trade per day with the EUR/USD. That's because GBP/JPY is more volatile and moves up and down a lot throughout the day, so I can get into several trades making anywhere from 40-150 pips on each trade.
If each of those currencies moves up 150 pips in one day, here's what could happen money-wise (keep in mind, this is just an example and I'm not using actual numbers):
EUR/USD is worth $150 ($1/pip). You do one trade on the daily chart, so you make $150 that day.
GBP/JPY is worth $127.50 ($0.85/pip). However, I do three trades on the 1 hour chart, worth 100 pips per trade, so I make $255 that day.
How is this possible?
Each currency moved up 150 pips overall for the day. However, during the day, they would move up and down repeatedly. If I'm using the 1 hour chart, then I have basically 24 periods to work with, while you only have 1 (the daily chart).
So, during three of those hours (my three trades), I had the opportunity to capture 100 pips each time it moved, giving me 300 pips for my trades vs. 150 pips for your trade.
That's why the value per pip is not the main concern when choosing which currency pair(s) to trade.
terry thankyou for all the information
that helps a lot.
No I understand more.
There is a lot to know and figure out what works.
Thank you for explaining it so well.
Technical correction. Pip values are NOT fixed for USD based pairs. It's fixed for non-USD based pairs (where the USD is part of the part, of course). The first listed currency in a pair is the Base currency, while the second is the Quote currency.
Originally Posted by In2Blues
Thanks for catching that, rhody.
If you think the market is going to move a lot on a pair
that has a high pip value, like EUR/GBP.
That pair seems to be a lot higher than other ones.
EUR/CHF is less than half the value per pip than EUR/GBP.
It would seem you would want to trade EUR/GBP since you would gain twice the profit with the same amount of pip movment.
Or is there something else that I am missing.
All things being equal, it would make sense to trade the pair that pays the most. It depends on what you're comfortable with.
"Money isn't everything but it sure keeps you in touch with your children."