Calculating pip value, and how much I am buying/selling?

Beginner Questions
1

Hi all

I am trying to grasp the basics of forex trading and am struggling to get my head around the values when deciding to buy/sell.

I understand a pip is 0.0001 (with the exception of when its the second decimal place for some pairs).

I am on this point in the babypips school and have looked at other sites but I just can’t grasp the fundimentals of working out how much I am buying or selling.

To give a little insight, I have opened a demo account with FX Pro. When I start trading I have £500 capital.

I am concentrating on the EUR/USD and the GBP/USD Markets.

Can someone help, in simpleton terms, how to work out the value of a pip so I can work out how much I wish to buy or sell.

Thank you!

2

When you enter in your lot size you will see a corresponding pound/pip value. Adjust lot size until you get the pound/pip you want. That’s it. Other than understanding the concept of how leverage works you will never have to do the calculations yourself. I’m years in and relied on this the entire time

3

Dont worry too much about how its calculated , use the pip calculator in the Tools section

4

There are 4 situations. Example:

  1. account in USD, trade EUR/USD (account currency == quote currency)
    PipCost = lots * pointsize = 1000k * 0.0001 = 0.1

  2. account in EUR, trade EUR/USD (account currency == base currency)
    PipCost = (lots * pointsize) / eur_usd_ask = (1000k * 0.0001) / 1.13369 = 0.088 = 0.09

  3. account in CHF, trade EUR/USD (account currency == quote currency of a combined pair)
    PipCost = (lots * pointsize) * usd_chf_bid = (1000k * 0.0001) * 0.95083 = 0.095 = 0.1

  4. account in EUR, trade USD/CHF (account currency == base currency of a combined pair)
    PipCost = (lots * pointsize) / eur_chf_ask = (1000k * 0.0001) / 1.07760 = 0.092 = 0.09

Pip Value Formula
Trading Calculator | Forex Profit / Loss Calculator | OANDA fxTrade

I hope I didn’t make any mistake.

1 Like
5

Thank you all for your answers.

I have a basic understanding now and I will learn more tomorrow! On to learning basic trading strategies!

6

Just use the calculator offered by your broker or found online (if your broker does not offer it). Focus on your strategy and let the calculator to that math for you :).