How is the pip change calculated?

January 17, 2014

How is the pip change or movement calculated?

As our currency prices are set to the fifth decimal place, it’s just the difference between the fourth decimal points.

For example, if the price of the AUD/USD is 1.04610 and it changed to 1.04690, we’d say the price of the pair has increased by 8 pips. (x.xxx1x – x.xxx9x = 8)

The Japanese Yen is the exception and is priced at three decimal places.

NB: The pip is not the tick size. The tick size refers to the minimum price movement. For example, a price jumped from 1.0001 to 1.0006. There was only one movement (one tick) but the move was worth 5 pips in that one tick.

Please read on to find out how to calculate the value of a pip and how to calculate profit/loss using pips.

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