How to calculate the value of a pip?

January 17, 2014

How do you calculate the value per pip?

With a 4 decimal placed currency pair, the following formula is used to calculate the value of the pip:

(0.0001 x Trade Amount) ÷ Spot Price = Per Pip Value

Have a look at the following example

Currency Pair  Spot Price  Trade Amount 
USD/CAD 0.8714 350,000 USD

0.0001 x 350,000 = 35

35 ÷ 0.8714 = 40.165 USD per pip

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

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