How Much is each pip worth in USD?

Discussion in 'Forex' started by patrick_newB, Aug 13, 2006.

  1. Take the pair GBP/JPY trading at 219.706, and let's say you buy 10,000 units. How much would each tick be worth in USD? How do you calculate this?


  2. Who's your broker?
  3. sccz97


    the pnl you make from any pair will always be in the currency of the underlyer (depending on which way you look at it), in this case the pnl will be in JPY.

    For pairs where USD isn't the underlying currency, you dollar tick value will not be a constant but will depend on the prevailing rate of the associated dollar pair (in this case usdjpy).

    So if we take your example, buying gbpjpy at 219.70 and selling at 219.75, your pnl will be (0.05 * 10,000) = 500 JPY. The dollar value of this will of course depend on the usdjpy rate. If the usdjpy is 116.00 when you closed out your gbpjpy position, your pnl in dollars would be $4.31 with ~$0.86/tick. If the dollar is 115.00 then you pnl would be $4.35 with ~$0.87/tick
  4. SarahG


    Don't forget the commission spread. They say it's commission free, but it really isn't. Your broker commission is built into the spread.
  5. sim03


  6. SarahG


    According to the profit calculator below, you made 8 pennies a tick on 10,000 units. .08 cents.

    If you buy 100,000 units, then that would bring your tick profit up to .86 cents. I think each unit is 100,000 and not 10,000
  7. sim03


    No. You're off by a factor of 10. Pound-Yen pips - as well as Anything-Yen pips - are .01, not .001. For example, change from 219.70 to 219.71, or from 219.706 to 219.716. (The 3rd decimal is just Oanda's "pipette".) On 10,000 GBP/JPY, 1 pip (tick) = $0.86, at current USD/JPY rates.

    No. A unit is a unit. 1 GBP/JPY is 1 unit. You're thinking "lot", 100,000 units. And pip value per lot is $8.60, not $0.86. Off by a factor of 10, again.

    I hope you realize that these mundane details are the kinds of things, order-of-magnitude stuff, that you need to know cold, in your sleep.
  8. SarahG


    That's why I don't trade forex and i stick to emini's. LOL. I paper traded it and didn't like it. I prefer emini's.
    Thanks for correcting me. :)
  9. Thanks for that very in depth and understandable explanation. That makes sense.
  10. A pip is still a pip. Any "commissions" will not affect how much a pip is worth.
    #10     Aug 13, 2006