# A surprisingly 'noob' question: are 100 pips worth 1% of a currency move?

I will explain!

I was listening to PowerTrading Radio the other day, and in hearing about the EUR/USD drop from May 2014

described as a “25%” drop, I wondered if I understood this concept at all: if the EUR/USD dropped 2,500 pips from its

1.40 high of last year, then we would talk about a 25% drop; if, however, we were describing what actually

happened, namely a 3,500-pip drop, then should we not call it a 35% drop?

I know that it is not so easy, because the value of pips for each currency pair is not fixed, although if someone

could explain how that applies to the pip-to-percentage question I put above, I would be grateful.

Thank you - and my apologies if this topic has been covered before (I tried a Google search but I could not

find the very direct answer that I was after).

Regards

PipMeHappy

Take current price and multiple by .25.

That’s 25%.

So 1.4 x .25 = .35

So if price went from 1.4 to 1.05 that would be a 25% drop.

I would assume that because any currency pair, or any asset for that matter, can appreciate in value to a ‘unlimited value’ then the percentage change is always calculated from either the maximum value obtained since inception of the asset, or the maximum value obtained within a predetermined time frame - such as the past 12 months.

I’ve never looked at pips in terms of “pip-to-percentage”, however to answer your question, I would assume 100pips are only equal to 1% when the currency pair has had an all time high value of 10,000 pips since inception (being measured from the origin of ‘0’, where the X and Y axis cross) , hence 100 pips IS 1% of 10,000.

To make it simple, if price moves from 1.40 (the determined high) to perhaps 1.10 (the determined low) I would simply say it’s fallen by 21.43%, irrespective of pip value. As long as you can determine the high and the low, the rest is easy.

…or just read matergunner, I obviously speak to much crap

Thank you, Mastergunner and Jezzode, you answered my question perfectly!

I also did want to ask, what is 25% in relation to? Jezzode: you answered that too!

Thank you - I will actually not use this for trading and stick to pips, but it was only to make sense of it.

Cheers!

1.4 - 1.05 = 0.35
0.35 * 100 / 1.4 = 25%

Simple math…

Yes, rindoan, that’s it!

I have not touched algebra since school! It is surprising how you can forget basic stuff like percentage operations.

Cheers.

F

In formula terms:

[(A - B) * 100] / A = C

where A= high, B= low, and C the final percentage differential.

Correct.

1.40 = 14,000 pips.

3500/14,000 = .25 (25%).

100 pips would be worth 1% of a change only from 10,000 pips which is parity. From 1.40 (14,000 pips), 100 pips is 71 basis points (0.71%).

Of course we trading low lifes don’t care about that because we use leverage and pyramiding to make a move of 3500 pips worth 100% of our account.