Comments on: Pip Values & Price After Pips http://www.series34exam.com/pip-values-and-price-after-pips/ Sun, 05 Feb 2012 03:54:43 +0000 http://wordpress.org/?v=2.7.1 hourly 1 By: Big Piping http://www.series34exam.com/pip-values-and-price-after-pips/comment-page-1/#comment-3802 Big Piping Mon, 10 Jan 2011 19:22:44 +0000 http://www.series34exam.com/?p=147#comment-3802 Pips are always valued in terms of CCY2 (USD/CHF pips are valued in CHF "Swiss Franc" terms, and EUR/USD pips are valued in USD "Dollar" terms). You are solving for the USD value of a pip per the amount traded. when USD is CCY1 you need to make a conversion (1 / given rate = USD Terms), and when USD is CCY2 the pips are already in USD Terms. Amount traded = 100,000. When USD is CCY1 (with conversion): USD/JPY at an exchange rate of 119.80 (.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 When USD is CCY2: EUR/USD at an exchange rate of 1.1930 .0001 X 100,000 = $10 per pip A short cut: If you know the value of a pip when USD is CCY2 (EUR/USD, GBP/USD)traded amounts are always valued at: Description .......... Trade amount ........ Value .......... "Mini Lot" ........... 10,000 .............. $1 ............. "Standard Lot" ....... 100,000 ............. $10 ............ "Million" ............ 1,000,000 ........... $100 ........... "Yard" ............... 1,000,000,000 ....... $1,000 ......... When USD is CCY1: Value / rate = Pip value 100,000 USD/CHF at 1.4555 $10 / 1.4555 = $6.87 When with JPY or HUF multiply by 100 or move decimal 2 places to the left. 100,000 USD/JPY at 119.80 $10 / 1.198 = $8.34 -------------------------------------------------------------------------- The ordering of a currency pair for FX trading is standard. It is a ranked list and to form a valid currency pair the higher ranked currency is placed first (hence it is USD/JPY and not JPY/USD) ................................... EUR/USD .................................. CCY1/CCY2 CCY1 AKA "Base Currency", "Transaction Currency", or "Traded Currency". CCY2 AKA "Quote Currency", "Secondary Currency", "Terms Currency”, “Variable Currency”, or “Counter Currency”. Pips are always valued in terms of CCY2 (USD/CHF pips are valued in CHF “Swiss Franc” terms, and EUR/USD pips are valued in USD “Dollar” terms).

You are solving for the USD value of a pip per the amount traded. when USD is CCY1 you need to make a conversion (1 / given rate = USD Terms), and when USD is CCY2 the pips are already in USD Terms.

Amount traded = 100,000.
When USD is CCY1 (with conversion):
USD/JPY at an exchange rate of 119.80
(.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

When USD is CCY2:
EUR/USD at an exchange rate of 1.1930
.0001 X 100,000 = $10 per pip

A short cut:

If you know the value of a pip when USD is CCY2 (EUR/USD, GBP/USD)traded amounts are always valued at:

Description ………. Trade amount …….. Value ……….
“Mini Lot” ……….. 10,000 ………….. $1 ………….
“Standard Lot” ……. 100,000 …………. $10 …………
“Million” ………… 1,000,000 ……….. $100 ………..
“Yard” …………… 1,000,000,000 ……. $1,000 ………

When USD is CCY1: Value / rate = Pip value
100,000 USD/CHF at 1.4555
$10 / 1.4555 = $6.87

When with JPY or HUF multiply by 100 or move decimal 2 places to the left.
100,000 USD/JPY at 119.80
$10 / 1.198 = $8.34
————————————————————————–

The ordering of a currency pair for FX trading is standard. It is a ranked list and to form a valid currency pair the higher ranked currency is placed first (hence it is USD/JPY and not JPY/USD)
…………………………….. EUR/USD
……………………………. CCY1/CCY2

CCY1 AKA “Base Currency”, “Transaction Currency”, or “Traded Currency”.

CCY2 AKA “Quote Currency”, “Secondary Currency”, “Terms Currency”, “Variable Currency”, or “Counter Currency”.

]]> By: Jantz Hoffman http://www.series34exam.com/pip-values-and-price-after-pips/comment-page-1/#comment-3210 Jantz Hoffman Thu, 30 Sep 2010 20:23:41 +0000 http://www.series34exam.com/?p=147#comment-3210 Pip value for JPY is .01 100,000 USD/JPY at 83.50 100,000 USD X.01 = 1000 1000/83.50 = 11.98 this calcuation allows for trades sizes not standard 100,000 or 10,000 lots...would work for odd trade sizes such as 124,215 if you are using the spot transaction as a hedge to anther investment that would require a specific dollar size. Pip value for JPY is .01

100,000 USD/JPY at 83.50

100,000 USD X.01 = 1000
1000/83.50 = 11.98

this calcuation allows for trades sizes not standard 100,000 or 10,000 lots…would work for odd trade sizes such as 124,215 if you are using the spot transaction as a hedge to anther investment that would require a specific dollar size.

]]> By: Jantz Hoffman http://www.series34exam.com/pip-values-and-price-after-pips/comment-page-1/#comment-3209 Jantz Hoffman Thu, 30 Sep 2010 20:19:42 +0000 http://www.series34exam.com/?p=147#comment-3209 Pip vlue is calcuated as such position size in USD X pip value / exhcange rate Example #1 100,000 GBP/USD pip value rate at 1.5715 100,000 GBP X 1.5715 = 157,150 USD 157150 USD X .001 = 15.715 15.715 / 1.5715 = 10.00 Example #2 100,000 USD/CAD pip value rate at 1.0285 10,000 USD X .0001 = 10 1 / 1.0285 = .972 Pip vlue is calcuated as such

position size in USD X pip value / exhcange rate

Example #1 100,000 GBP/USD pip value rate at 1.5715

100,000 GBP X 1.5715 = 157,150 USD
157150 USD X .001 = 15.715
15.715 / 1.5715 = 10.00

Example #2 100,000 USD/CAD pip value rate at 1.0285

10,000 USD X .0001 = 10
1 / 1.0285 = .972

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