In this article, base currency refers to the first currency in a pair (ie EUR in EURUSD), and quote currency refers to the second (ie USD).
To Calculate:
1) If the account is denominated in USD and USD is the quote currency (EURUSD):
Pip Value = 0.0001 x Units
Example: You have a 5,000 USD account and go long 25,000 EURUSD (.25 lots):
Pip Value = 0.0001 x Units
Pip Value = 0.0001 x 25,000
Pip Value = $2.50
2. If the account is denominated in another currency (ie AUD) and USD is the quote currency (EURUSD)
Pip Value = 0.0001 x Units / AUDUSD
Example – You have a $5,000 AUD account and you go long $25,000 EURUSD:
Pip Value = 0.0001 x Units / AUDUSD
Pip Value = 0.0001 x 25,000 / .7150
Pip Value = $2.50 / .7150
Pip Value = $3.50
Note at current market rates, pip value is substantially larger if an account is denominated in AUD – this is very important to know when calculating stop losses.
2) If the account is denominated in USD and USD is the base currency (USDCHF):
Pip value = 0.0001 x units/quote
Example – You have a $5,000 USD account and go long $25,000 USDCHF:
Pip value = 0.0001 x units / quote
Pip Value = 0.0001 x 25,000 / USDCHF
Pip Value = $2.50 / .9915
Pip Value = $2.52
3.) If the account is denominated in another currency (ie AUD) and USD is the base currency (USDCHF):
Pip Value = 0.0001 x units / quote / AUDUSD
Example – You have a $5,000 AUD account and go long $25,000 USDCHF:
Pip value = 0.0001 x units / quote / AUDUSD
Pip Value = 0.0001 x 25 000 / USDCHF / AUDUSD
Pip Value = $2.50 / .9915 / AUDUSD
Pip Value = $2.52 / .7150
Pip Value = $3.52
3) If the account is denominated in USD and you are trading across with no USD component such as EURGBP:
Pip Value = 0.0001 x Units x Quote currency rate (GBPUSD).
Example: You have a 5,000 USD account and go long 25,000 EURGBP (.25 lots):
Pip Value = 0.0001 x Units x GBPUSD
Pip Value = 0.0001 x 25 000 x GBPUSD
Pip Value = $2.50 x 1.4350
Pip Value = $3.59
If we used the above example but with an AUD account, we could either divide the final USD pip value by the AUDUSD rate or use GBPAUD instead of GBPUSD as the quote currency rate.
Note that for a pair like EURCHF, the quote currency is not available as CHF USD, therefore you would use 1/(USDCHF) for the quote currency rate. Also, with some pairs, a multiplier other than 0.0001 must be used (if JPY is the quote currency, for example, the multiplier is 0.01).
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