# Lot calculation

Hi, i was going trough the guide and i didnt understand something about the calculation of lots.
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1. USD/JPY at an exchange rate of 119.80: (.01 / 119.80) x 100,000 = \$8.34 per [pip]
1. USD/CHF at an exchange rate of 1.4555: (.0001 / 1.4555) x 100,000 = \$6.87 per [pip]
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why is USD/JPY calculated as (.01 / 119.80) x 100,000 = \$8.34 per [pip] and not like (.0001 / 119.80) x 100,000 = \$8.34 per [pip] ??

"The calculation of the lots in the forex market is done with the help of the pip value. A pip is the minimum change which can happen in the currency pair. This value is different for every currency. For example in USD/CHF the exchange rate is 0.96500 which means that you need 0.95 swiss francs to buy 1 US dollar. Now if this hypothetical exchange rate changes to 0.96510 that means it has moved higher by 1 pip. So now to calculate the lot size per pip as per the method, we divide the pip value from exchange rate multiplied with 100,000 which translates too:-

(0.0001/1.4555)*100000= \$6.87

I think it is pretty clear because I am using your examples for the illustration. If we see the pip for USD/JPY it is two decimal points which is 0.01 of the exchange rate, which means if the currency is trading at the rate of 110.01 and moves to 110.02, then it is moved 1 pip higher.

These trading calculations can be mind numbing because of the complex nature of the calculations. I completely understand this because I am also not good at mathematics to be honest. So I have been relying on trading calculators which are provided by various brokers such as Fxview, Oanda, IG, IB etc. Lot values are important but there are other things which are also important for your trading like the commission values, fibonacci values plus lot values, that can be calculated through these calculators."

You need to know the pip value to calculate the lot size. But I am not sure why you are doing that manually when there are many brokers and even babypips have their own position size calculator that you can use to do the calculations. It is easier and faster.