Posted by forex at 7:12 AM
Read our previous post
1. Determine the notional amount. This is the size of the currency. For instance, the nominal value of 100,000 Japanese Yen (JPY) is 100,000. Let's say you want to find the value of one pip to exchange 10,000 EUR/USD (euro/dollars). The notional is EUR10,000.
2. Determine the currency exchange rate. There are numerous outlets that provide quotes for foreign currency. See Resources to a link to a popular online quote website. Let's say the exchange rate for EUR/USD is .8942.
3. Divide the value of 1 pip by the exchange rate. The calculation is: .0001 x .8942 = .00008942.
4. Calculate the value of a pip. Multiply the answer in Step 3 by the notional amount. The calculation is .00008942 x EUR10,000 = 1.1183.