A pip is the smallest price increment that any currency pair can move in either direction. In the FOREX markets, profits are calculated in terms of pips first, then dollars second. See Tables 6.1 and 6.2. The conversion of pips to dollars may be considered the base FOREX calculation. Calculate that against your lot size and you are halfway home already.
Approximate USD values for a one-pip move per contract in the major currency pairs are shown in Table 6.2, per 100,000 units of the base currency. TIP: On a typical day, actively traded currency pairs like EUR/USD and USD/JPY may fluctuate 100 pips or more. Table 6.2 is based on a margin requirement of 100 percent (leverage = 1:1). To calculate actual profit (or loss) in leveraged positions, multiply the pip value per 100k times the leverage ratio (margin percentage divided by 100).
Note that the EUR/GBP cross rate pair in Table 6.2 uses multiplication with the USD spot price instead of division. This is because the USD is the quote (second) currency in the spot conversion pair.
TABLE 6.1 Single Pip Values
TABLE 6.2 Full Lot Pip Values
Approximate USD values for a one-pip move per contract in the major currency pairs are shown in Table 6.2, per 100,000 units of the base currency. TIP: On a typical day, actively traded currency pairs like EUR/USD and USD/JPY may fluctuate 100 pips or more. Table 6.2 is based on a margin requirement of 100 percent (leverage = 1:1). To calculate actual profit (or loss) in leveraged positions, multiply the pip value per 100k times the leverage ratio (margin percentage divided by 100).
Note that the EUR/GBP cross rate pair in Table 6.2 uses multiplication with the USD spot price instead of division. This is because the USD is the quote (second) currency in the spot conversion pair.
TABLE 6.1 Single Pip Values
TABLE 6.2 Full Lot Pip Values
