PIP Calculation

Beginner Questions
1

I am using a MSFX - Trading History scrip to generate an Excel spreadsheet of my demo trading history to analyze my strategy. It reports a EURUSD trade as buy at 1.50054 and close at 1.49072 for a sum of 98.2 pips. This was on an account balance of $1500 and the trade was for .2 lots.
No matter what I do I cannot make a hand and calculator computation com out to 98.3 pips or even close. I use the numbers you see here. Please explain so I can use Excel to compute any pip value.
Bill

2

The difference of 1.50054 and 1.49072 is 0.00982 that = 98.2 pips

3

[B]Blockie[/B]:

You buy 0.2 lots of USD/EUR at 1.50054 (you go long in this pair)

If 1 Lot is 100,000, 0.2 lots is 20,000 (USD in this case)

Then you buy 20,000 USD at 1.50054

If you close this trade and sold your 20,000 USD at 1.49072, the diference betwen the buy and sold price is:

1.50054 - 1.49072 = 0.00982 (or 98.2 pips)

And 20,000 * 0.00982 = 196.4 USD

If your account have at the begin of this trade 1,500 USD

At the end of the trade your account have the next balance

1,500 - 196.4 = 1,303.6

Regards

1 Like
4

Soo Sorry.

[B]BIG MISTAKE[/B] this pair is EUR/USD not USD/EUR.

I Apology, but well is Sunday.

But the numbers are O.K.

Best Regards

5

Thanks !!
Bill

6

LOBOTRADER,

Now that I understand when the USD is the secondary in a pair how about when it is primary in a pair such as USDJPY
I compute the PIPS at 13.3 but I cannot figure out the formula for profit in USD. The Excel chart has it at $30.69, but I don’t know the underlying computation. Can you help me again, LoboTrader

7

Blockie:

O.K. but i need to know how many lots you trade.

8

Same as before .2 lots.

9

If you have a profit in the pair USD/JPY, then i think than you sell USD (you go short in this trade) and buy JPY (smart trade).

You sell 0.2 lots of USD/JPY equal to 20,000 USD at suppose 86.500 and close your trade buying 20,000 USD at 86.367 (The difference in pips are 86.500 - 86.367 = 13.3 pips).

The most important fact is [B]You sell USD to Buy JPY[/B].

At the start of your Trade, with 20,000 USD you can buy 20,000 X 86.5 = 1,730,000 Yens

When you close your trade, you need to buy the same quantity of USD of your Trade = 20,000 USD.

But the Yen now have a different value, in my example this value is 86.367

Therefore, you only need 20,000 X 86.367 = 1,727,340 Yens

But you have 1,730,000, and the difference (1,730,000 - 1,727,340 = 2,660 Yens) is at your favor

And with these 2,660 yens you can buy

2,660 / 86.367 = 30.8 USD

THIS IS THE ORIGIN OF YOUR PROFIT

Regards