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  #1  
Old 11th-January-2008, 21:31
mojo321 mojo321 is offline
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Question Pip values

Hello,

I am very new, but I am a good study, so I hope to trade with actual money sometime in the Fall. In the meantime, I am reading up as much as possible. I will start demo trading sometime this summer.

My question is in regards to pip value.

For example: if USD/CHF has an ask price of 1.5250 each pip would be worth 0.0001 divided by 1.5250 times the lot size. For a standard $100000 lot, that's $6.55 per pip. For a mini $10000 lot, that's $0.66 per pip.

Yet everyone is always talking about $10 per pip trades (or $1 per pip in mini lots). It seems to me that it is impossible to put a set value on a pip like that. What am I missing?

Mojo
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  #2  
Old 11th-January-2008, 21:52
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Steve Pickering Steve Pickering is offline
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Default Re: Pip values

Hi

Yes you are right in your calculation of the pip value of USD/CHF (dollar/swiss).

However, many traders talk about the EUR/USD as the main trading currency pair, in which the pip value on a lot (100,000) is $10.

This also applies to the GBP/USD currency pair.

A pip value for a lot will in cases with 4 decimal places 100 of the quoted (i.e. the right hand currency in the quote) currency. With the yen, it is 10,000.

Regards

Steve
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  #3  
Old 12th-January-2008, 10:18
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DrForex DrForex is offline
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Default Re: Pip values

The following should resolve all uncertainties:

First of all you must understand currency quoting conventions and the differrence between the base currency and the terms currency.

In the spot forex market (but not localized futures markets) the quoting
conventions are:

Base / terms:
EUR/USD
GBP/USD
USD/CHF
USD/JPY
AUD/USD

The following rules:

EUR always base
GBP always base except EURGBP
Old colonial like AUD / NZD Always base except EUR / GBP
USD always base except UER / GBP / Old colonials
CHFJPY

Pip values:

To express the value in the terms currency multiply 1 pip with the lot value:

EURUSD pip = 0.0001 X 100,000 = $10.00
EURUSD pip = 0.0001 X 10,000 = $1.00

USDCHF pip = 0.0001 X 100,000 = SFr 10.00
USDCHF pip = 0.0001 X 10,000 = SFr 1.00

To convert to the base currency divide by exchange rate:

Say EURUSD exchange rate = 1.4750 = $10.00 / 1.4750 = EUR 6.78

Say USDCHF exchange rate = 1.1015 = $10.00 / 1.1015 = $9.08

JPY works same principle 2nd decimal.
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  #4  
Old 14th-January-2008, 15:32
mojo321 mojo321 is offline
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Smile Re: Pip values

Excellent---Thank you! How cool that both experts have responded. I have signed up for the Bird Watching e-letter. I have read the intorductory chapters and plan on buying the book soon. My plan is to get a deep understanding of pure technical analysis, daydream, and then smash it all into perspective with your book.

I'm taking this slow. I don't think I have any major misconceptions. Of course I go throught the daydream of making a mint, nut I'm doing my best to keep myself grounded. A 10% return on my initial $2000 per month is as lofty a goal as I can imagine. That's enough to retire well in 10 years!

Thanks again guys

Mojo
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  #5  
Old 1st-January-2009, 08:13
oplex oplex is offline
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Default Re: Pip values

Hi guys,

Can you explain to me how the pip calculation for the USD/JPY works? I'm having difficulties due to the fact this pair has only 2 decimals.

For starters, say the JPY/USD falls from 90.55 to 85.55, did it fall by 500 pips or 5,000 pips?
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Old 5th-January-2009, 19:46
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Default Re: Pip values

It is 500 pips. A pip is a pip is a pip, but for Yen, it is to two decimal points. Why? because the big figure is around 3 figures, (93 at the time of writing, but historically 100+). Therefore, the value of a pip is:

Lot size (100000) x .01 = JPY 1000 = $10.72

Now, as an exercise, what is the pip value of the Zimbabwe Dollar?

(the rate is 1 US Dollar = 4,087,579 Zimbabwe Dollar according to Oanda)
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  #7  
Old 31st-January-2012, 13:03
Mike88 Mike88 is offline
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Default Re: Pip values

I have read and understand the explanation of how to calculate pip values for currency pairs where USD is the base or term, thank you. Can you explain if it is it different for non-USD currency pairs, for example AUD/JPY? thank you
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  #8  
Old 4th-August-2013, 04:33
tom82 tom82 is offline
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Default Re: Pip values

How does one work out the pip value of xauusd, xagusd and wti?
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  #9  
Old 18th-September-2013, 08:20
Yes_I_Know Yes_I_Know is offline
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Default Re: Pip values

Thanks for all the explanations. It was very useful. And i'm joining to the question about xauusd.
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