Pip Value Formula

The standard pip value for a USD-based account and USD-quoted currency pairs (EUR/USD, GBP/USD, AUD/USD, etc.) is $10 for one standard lot. But many beginning Forex traders soon stumble upon non-USD currency pairs (USD/JPY, USD/CHF, or more difficult – EUR/JPY, EUR/CHF) or non-dollar based accounts. In all these cases, the value of a single pip for your positions is not obvious. Here is a simple formula to calculate the pip value in all possible cases.

1. Determine your account’s currency (in about 90% cases, it is USD). Let's assume your account's currency is XXX. If the currency pair you are trading looks like YYY/XXX, which means that your account currency is the same as the quote currency of the pair, please proceed to step 4.
2. If the currency pair looks like XXX/YYY (your account's currency is the base currency of the pair), then check this currency pair’s current Ask rate (the highest of the rates) and proceed to step 5.
3. If the account’s currency is not present in the pair of the position (the pair looks like YYY/ZZZ), you have to check the exchange rate of a reference currency pair composed of your  account's currency (XXX) and the quote currency of the position's pair (ZZZ):
   1. If the reference currency pair looks like ZZZ/XXX, then you should check and remember its current Bid rate (the lowest of the rates).
   2. If the reference pair looks like XXX/ZZZ, then you should check and remember its current Ask rate (the highest of the rates).
   3. Proceed to step 6.
4. You should simply multiply the amount of currency units in your position (100,000 for 1 standard lot) by the size of one pip (0.0001 for almost all pairs and 0.01 for almost all pairs quoted in JPY). You will get a pip value of 10 currency units per 1 standard lot. The end.
5. You should multiply the amount of currency units in your position (100,000 for 1 standard lot) by the size of one pip (0.0001 for almost all pairs and 0.01 for almost all pairs quoted in JPY) and then divide the result by the Ask rate from step 2. The end.
6. You should multiply the amount of currency units in your position (100,000 for 1 standard lot) by the size of one pip (0.0001 for almost all pairs and 0.01 for almost all pairs quoted in JPY) and either multiply the result by the Bid rate received in step 3a or divide the result by the Ask rate received in step 3b.

Some examples:

• The easiest case: a USD account and a EUR/USD position of 1 standard lot – according to step 1, we should proceed to step 4:
  
  100,000 x 0.0001 = 10 (USD).
• Medium difficulty: a EUR account and a EUR/USD position of 1.5 standard lots – according to step 2, we should remember the current Ask rate of EUR/USD (1.3449) and proceed to step 5:
  
  150,000 x 0.0001 = 15; 15 / 1.3449 = 11.15 (EUR).
• A difficult case: a JPY account and a EUR/USD position of 0.7 standard lots – according to step 3a, we should remember the current Bid rate of USD/JPY (92.51) and proceed to step 6:
  
  70,000 x 0.0001 = 7; 7 * 92.51 = 647.57 (JPY).

If that sounds too complicated for you or if you have to calculate the value of the pip too often, you can use the free online pip value calculator.

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