Understanding the Pip Calculator

Hi all, So here I am my very first post. I am at BabyPip Preschool at the moment, and have almost graduated - or so I thought. I really thought I understood the Pip and Pipette section but when trying to use the calculator I was blown away. Here is my problem: What on earth is the Position Size? My broker has lots of mini pips (10,000) and here is todays trade on my demo account

BUY EUR/USD Amount $160 UNITS 4000 OPEN 1.2719

My confusion is I am not sure what to place in the Position Size. Is it the 10,000 lot of the mini pip, the 4,000 units I actually received for my $160 or the actual levarage of 25 which I placed to trade with?



If I understand the trade you took, the answer to your question is: [B]4000[/B] — meaning 4,000 units of base currency (but leaving out the [I]comma[/I]).

Here is my understanding of your trade:

• USD account currency

• $160 account balance

• EUR/USD pair traded

• 4000-unit position size

• 1.2719 EUR/USD price at time of entry

If those figures are correct, then the pip-value calculator, with data entered, would look like this:

The answer displayed by the Calculator (0.4) means $0.40 per pip [B]for this size position.[/B]

You could have figured this in your head.

The cross-currency (USD) in this trade is the same as your account currency (USD). Whenever this is the case, then the value of one pip is always:

• $10 per pip, per standard lot (100,000 units of base currency)

• $1 per pip, per mini-lot (10,000 units)

• $0.10 per pip, per micro-lot (1,000 units)

• $0.01 per pip, per nano-lot (100 units)

• $0.0001 per pip, per unit of base currency

Your position size (4,000 units) could have been figured (in your head) in any one of these ways: 0.4 mini-lot, 4 micro-lots, 40 nano-lots, or 4,000 units.

But, if you’re using the Pip-Value Calculator, there is only one way to enter position size, and that is [B]by units.[/B] So, a very large position, say 100 standard lots, would be entered as 10000000 units.

The rule given above, regarding the cross-currency and the account currency being the same currency, applies to any account currency (except euro, which is a special case).

If your account currency were AUD, for example, then any pair of the form XXX/AUD would follow the rule. That is, one pip would be worth A$10 per standard lot, A$1 per mini-lot, etc.

If your account currency were JPY, then EVERY yen-pair would follow the rule, because in every yen-pair the JPY is ALWAYS the cross-currency. But, a multiplier (100) is applied to yen calculations, because the yen has relatively tiny value compared to the other major world currencies. So, for example, if you were to trade USD/JPY — [B]or any other yen-pair[/B] —in a yen-account, then one pip would be worth ¥1,000 per standard lot, ¥100 per mini-lot, etc.

The rule given above does not apply to euro-denominated accounts, because the EUR is NEVER the cross-currency in any currency pair. By international agreement, in all currency pair quoting, the EUR is ALWAYS the base currency. That is, all euro pairs have the form EUR/XXX. The same international agreement places the JPY at the bottom of the currency hierarchy, making it always the cross-currency in any pairing.

Sorry, I sort of ran down a rabbit-trail, there.

I hope that I have answered your question.

Hey Clint, Great reply, thanks a bunch. So I guess I did understand the lesson (mostly) as that is what I had originally thought. I was just not sure if the terminology being used “position size” was referring to the 4000 units or the lot of 10000