Forex margin and pip calculator

Forex trading pips explained

Pips, short for percentage in point, are a measurement of how much a currency pair moves. Interpreting price changes using pips enables traders to profit from relatively small movements. Also sometimes known as ‘points’, the value of a pip will vary depending on the forex pair traded.

How much is a pip worth?

For the majority of currency pairs, one pip equates to a single-digit change in the fourth decimal place (0.0001) of the value of a currency – or 1/100 of 1%. For example, if EUR/USD moves from 1.1722 to 1.1727, it has gone up by five pips. 

For Japanese yen (JPY) pairs, however, the calculation is different. Here, the second digit after the decimal point is the pip and equates to 1%. 

However, how much a one-pip move in a forex pair affects your profit or loss will depend on the size of your position.

How the forex pip calculator works

The forex pip calculator works by multiplying the size of your position by the value of a single pip, then converting that figure into your chosen base currency. It also calculates your total required margin, by dividing the total size of your position by your chosen market’s margin factor.

The pip calculator will show you exactly how much you’d make or lose for each point of movement that may occur in the underlying market – together with the deposit requirements for opening a position. 

Say, for example, that you bought EUR/USD with a contract size of 10. You’d make or lose 10 USD for each pip of movement – and by selecting AUD as your base currency in the calculator, you can see how much that is worth in Australian dollars.

Fractional pips

In addition to the standard pip, most forex brokers also offer ‘fractional pip pricing’ by adding an extra fifth decimal place to their quotes. As well as enabling tighter spreads, these provide a more precise price.