In forex you all must have heard people talking about a “PIP”. What is a “PIP”? It stands for Point in percentage and while trading in forex market we calculate our profit and losses via pips.
How to calculate profit and loss via a “pip”?
To calculate this first we need to confirm our size of trade or some also call it “lot size”. In MT4, a trade size of 0.01 lot means you are taking a position of 1000 units of that currency pair.
Similarly, 0.10 lot size will be of 10 x 1000 units = 10,000 units
Now we can come to the most commonly traded currency pair i.e: EUR/USD. Today’s rate for this EUR/USD currency pair is:
Expect JPY currency pair, in all other currency pairs “a pip is calculated to the 1/10,000 place” that will be “four” places to the right of the decimal. If the rate of EUR/USD goes up with 1 pip then it will be at 1.0868 and vice versa. In currency trading, it is all about the fighting for the “pips”.
||MT4 - Lot size
||Pips fluctuation (+/-)
||0.01 or 1,000 units
||0.10 or 10,000 units
||1.0 or 100,000 units