Margin and pip calculator

What are pips?

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 are pips interpreted?

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 1/10 of 1%.

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.

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.