Pip Values
Forex pip value refers to the amount of money gained/lost for each pip that is gained/lost in currency trading. The easiest way to find out pip value of a currency pair is by observing how much money you gain/lose for each pip you gain/lose when you are in-trading. To do the manual calculation, you need to know what ‘1 pip’ is for the related currency pair. The pip value for each currency pair is different and the value can be determined according to the following formula:
→ FORMULA: Pip Value = 1 pip x Trade Size
Price After Pips
I am not sure what they are trying to get at…maybe the fact that there are spreads and that when you initiate a position you are automatically starting with a loss the size of the spread….
Example:
USD/JPY at an exchange rate of 119.90
(.01 / 119.80) x $100,000 = $8.34 per pip
USD/CHF at an exchange rate of 1.4555
(.0001 / 1.4555) x $100,000 = $6.87 per pip
In cases where the US Dollar is not quoted first, the formula is slightly different.
EUR/USD at an exchange rate of 1.1930
(.0001 / 1.1930) X EUR 100,000 = EUR 8.38 x 1.1930 = $9.99734 rounded up will be $10 per pip
GBP/USD at an exchange rate or 1.8040
(.0001 / 1.8040) x GBP 100,000 = 5.54 x 1.8040 = 9.99416 rounded up will be $10 per pip.
Good Website:
http://www.babypips.com/school/know_your_ps_and_ls.html
Study Guide >> Forex Trading Calculations >> Pip Values and Price After Pips