How do I calculate the Pip value?

You can calculate the pip value for a trade by using the Pip Calculator and entering the number of units in the ‘Trade size’ box.

Knowing the pip value can help you to calculate the commission per trade.

The formula is as follows:

  • Instruments priced to 4 decimal places: Units X 0.0001 X conversion to USD = Pip value

  • Instruments priced to 3 decimal places: Units X 0.001 X conversion to USD = Pip value

  • Instruments priced to 2 decimal places: Units X 0.01 X conversion to USD = Pip value

  • Instruments priced to 1 decimal place: Units X 0.1 X conversion to USD = Pip value

Instruments that have USD as the quote currency (listed second, after the base currency) do not require a conversion and therefore the ‘conversion to USD’ value will be 1. 

 

Example 1: Let's calculate the pip value for a GBP/USD trade with 7000 units.

GBP/USD is priced to 4 decimal places, so we multiply the number of units by 0.0001.

7000 Units X 0.0001 = 0.7

GBP/USD has USD as the quote currency, so no conversion is required.

0.7 X 1 = Pip value of $0.70

 

Example 2: Let's calculate the pip value for a GBP/JPY trade with 7000 units.

GBP/JPY is priced to 2 decimal places, so we multiply the number of units by 0.01.

7000 Units X 0.01 = 70

GBP/JPY has JPY as the quote currency, so we need to convert this figure to USD, the base currency of your TBanque account.

70 X 0.0093 (current JPY/USD exchange rate at the time of writing) = Pip value of $0.65

 

For information on how to calculate the amount of units for a trade, click here.