Posted by forex at 3:22 AM
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Calculate Pips
1. Subtract the sell price from the buy price. This will give you the total trade profit or loss in pips. For example you buy the EUR/USD at 1.4675 and sell it at 1.4792. Therefore 1.4792 -1.4675 = .0117 and this equals 117 pips. For a Japanese yen pair, an example would be to buy the GBP/JPY at 145.50 and sell it at 143.75. This would lead to 143.75 - 145.50 = -1.75, and therefore a loss of 175 pips.
2. Calculate the dollar amount per pip. If the USD is the counter currency, then every 1 pip equals $.0001. If the counter currency isn't in U.S. dollars, you need to multiply .0001 by the counter currency's worth in dollars. For Example, the EUR/GBP is the currency pair of the euro and the Great Britain pound. The GBP is the counter currency. So if the GBP/USD is trading at 1.6600, then you multiply 1.6600 by .0001 to calculate the dollar amount per pip of the EUR/GBP.
3. Multiply dollars per pip to position size. For example if the GBP/USD is trading at 1.6600, then 25,000 EUR/GBP equals $4.15 per pip (25,000 * 1.6600)
4. Multiply profit or loss in pips by $ amount per pip , to calculate the profit or loss of a trade in dollars. Use the example from step 3: 25,000 EUR/GBP and a profit of 33 pips. This will calculate as $4.15 * 33 = $136.95