hello everyone
im currently learning forex but i am struggling to understand how the price quotes work ie 1.4444

im looking to add and subtract 30 or 40 pips for stop loss but have no idea how the digits work

what digit to add and subtract it onto, i know it sounds stupid but am totally lost with it all

is there anywhere online a website for instance that would show me exactly how it all works

or a calculator i could use if so how

can anyone pls help me asap

thanks
leanne xxx

Hi Leanne—the [B]last two [/B]digits to the [B]right [/B]of the decimal are your “pip counters”. In your example, you would take the 30 away from your 1.44[B][I][U]44[/U][/I][/B], giving you 1.4414. However, notice that the [B][I]Yen[/I][/B] only has 2 digits to the right of the decimal—I don’t know why. But, those two are your “pip counters”, so if the price was 89.55, a stop of 30 pips under would be at 89.25.

Hope this helps, and as I am also a newbie, I hope I have it right!! :eek:

Potaire

The yen only has 2 decimal places because it is 89.55 yen per USD (or which ever currency it is paired with)

Yes Griffin, I realize that. But [B]WHY [/B]does any Yen pair only have 2 decimals, and pairs [B]without[/B] the Yen have 4?

Potaire

does this mean you only use the last 2 digits as the pip counter, does the other digits ever get used?

thanks
leanne xx

Well…hmmm. Let’s try this track. Think of this as simple math…which it is. Pretend the decimals don’t exist. So, if the price is 1.4444, and you want a 30 pip stop underneath, it would go like this:

``````                                            14444
-      30
_____
14414
``````

If you wanted a 50 pip stop, it goes like this:

``````                                             14444
-      50
_____
14394
``````

Certainly you know what these numbers mean, or, just put the decimal back when you are done subtracting. Here is an example of a 50 pip stop when the Yen is involved:

``````                                           89.44  current price
``````

Soooo, simple math is what it is:

``````                                            8944
-   50
_____
8894
``````

It will work the same way if you are adding instead of subtracting. Just think of it as 2nd grade math.

The reason for the 4 place decimals is cuz we are measuring the currency down to one ten-thousandth of a unit. In the case of the Yen, we are measuring it down to one one-hundredth of a unit. Again, I don’t know why the Japanese want it that way, but, it’s their currency, so what can we say.:rolleyes:

Does this help???

Potaire

(Hopefully she never goes to FXCM, which, because of the micro accounts, uses 5 decimal places. I don’t wanna have to explain [B]THAT[/B]!! lol )

This may shed some light on the situation

PIP & PROFIT/LOSS CALCULATION

Understanding how to calculate pip value and profit/loss requires a basic knowledge of currency pairs and crosses.
Direct Rates GBP/USD, EUR/USD, AUD/USD, NZD/USD
Cross Rates GBP/JPY, EUR/JPY, AUD/JPY, EUR/GBP, GBP/CHF
(Where the US Dollar is not involved)

Profit/Loss Calculation
DIRECT RATES
Currency pairs where the USD is the quote currency are referred to as direct rates. This holds true for such currencies as the EUR,GBP, NZD and the AUD.

Calculating direct Rate Pip Value
Pip stands for “price interest point” and refers to the smallest incremental price move of a currency. Tick size is the smallest possible change in price. Pip value for direct rates are calculated according to the following formula:
Formula: Pip = lot size x tick size
Example for 100,000 GBP/USD contract:
1 pip = 100,000 (lot size) x .0001 (tick size) = \$10.00 USD

Calculating Direct Rate P/L (Profit/Loss)
Calculating P/L for direct rates is calculated as follows:
Formula: Selling price - Purchase price = P/L

Example for 200,000 GBP/USD contract initially bought at 1.7505 then sold (closed) at 1.7540:
1.7540 (selling price) - 1.7505 (purchase price) = .0035 positive pip difference = 35 pip profit

To further convert the above P/L to USD, use the following calculation:
Formula: Pip profit (loss) x lot size x tick size = USD profit (loss)
35 (pip profit) x 200,000 (lot size) x .0001 (tick size) = USD \$700 profit

INDIRECT RATES
Most currencies are traded indirectly against the U.S. Dollar (USD), and these pairs are referred to as indirect rates. An example is the USD/CAD (Canadian Dollar). The USD is the “base currency,” the CAD is the “quote currency” and the rate quote is expressed as units per USD. An example of a indirect rate is as follows: USD/CAD trading at 1.1500 means that 1 USD = 1.1500 CAD.

Calculating Indirect Rate Pip Value
Pip stands for “price interest point” and refers to the smallest incremental price move of a currency. Tick size is the smallest possible change in price. Pip value for indirect rates are calculated according to the following formula:
Formula: pip = lot size x tick size / current rate
Example for 100,000 USD/JPY contract currently trading at 120.50:
1 pip = 100,000 (lot size) x .01 (tick size) / 120.50 (current rate) = USD \$8.30

Calculating Indirect Rate P/L (Profit/Loss)
Calculating P/L for indirect rates is calculated as follows:
Formula Selling price - Purchase price = P/L
Example for 100,000 USD/JPY contract initially bought at 120.50 then sold (closed) at 120.30:
120.30 (selling price) - 120.50 (purchase price) = -.20 negative pip difference = 20 pip loss
To further convert the above P/L to USD, use the above “Calculating Indirect Rate Pip Value” as follows:
1 pip = 100,000 (lot size) x .01 (tick size) / 120.30 (current rate) = USD \$8.31
Therefore: USD \$8.31 (pip value) x 20 (pip loss) = USD \$166.20 loss

CROSS RATES
Currency pairs that do not involve the USD are referred to as cross rates. Even though the USD is not represented in the quote, the USD rate is usually used in the quote calculation. An example of a cross rate is the EUR/GBP. Again, the EUR is the base currency and the GBP is the quote currency.

Calculating Cross Rate Pip Value
Pip stands for “price interest point” and refers to the smallest incremental price move of a currency. Tick size is the smallest possible change in price. The base quote is the current base pair quote. Pip value for cross rates are calculated according to the following formula:
Formula Pip = lot size x tick size x base quote / current rate
Example for 100,000 EUR/GBP contract currently trading at .6750, and EUR/USD currently trading at 1.1840:
1 pip = 100,000 (lot size) x .0001 (tick size) x 1.1840 (EUR/USD base quote) / .6750 (current rate) = USD \$17.54

Calculating Cross Rate P/L (Profit/Loss)
Calculating P/L for cross rates is calculated as follows:
Formula Selling price - Purchase price = P/L
Example for 100,000 EUR/GBP contract initially sold at .6760 then bought (closed) at .6750:
.6760 (selling price) - .6750 (purchase price) = .0010 positive pip difference = 10 pip profit
To further convert the above P/L to USD, use the above “Calculating Cross Rate Pip Value” as follows:
1 pip = 100,000 (lot size) x .0001 (tick size) x 1.1840 (EUR/USD base quote) / .6750 (current rate) = USD \$17.54
Therefore: USD \$17.54 (pip value) x 10 (pip profit) = USD \$170.54 profit

The yen pairs only have 2 decimals because of the large difference in the currency rates. Most currencies only have a small amount of difference between them, like .77 euros in 1 US dollar. But there are over 90 yen in 1 US dollar, so only two decimal places are needed. Four decimals would be such minuscule amounts that if we used them the yen pairs would move hundreds of pips every few seconds.

BlaiserBoy, perhaps I am wrong, but I believe the trouble is only that she is not sure what is [B][I]x [/I][/B]number of pips away from the current price. Although the stuff you submitted is accurate indeed, and very useful, I think it is [B]WAY[/B] beyond the scope of her question. Basically, her question was merely this:

``````           What is 30 pips under 1.4444??
``````

She doesn’t understand which numbers to subtract the 30 from.

If I am wrong I certainly apologize to you, BlaiseBoy.:o

Do I have this right, is this what you’re having trouble with, Leanne??

Potaire

Ahhhhh, Phil, now I understand. Basically, a Yen is more comparable to a penny than it is a dollar. I think I got it. Many thanx to you for the lightbulb, Phil.

Potaire

so for the yen where i pretend the decimals dont exist

say for example 89.90 if i pretend the decimals dont exist is it put like 8990 +30 is 9020

so it would be 90.20

is this correct?

leanne x

Correctio…!!

Bingo!!! I think she’s got it!!

Don’t feel bad–the [B]EXACT[/B] same thing confused me at first. That’s why I knew immediately what your trouble was.