Learn to Trade Forex

If you are a beginner and you want to learn the basics of Forex Trading or you want to learn the core of Technical Analysis with detailed examples please visit the Forex Trading Courses page. You will find huge amount of valuable information and video tutorials worth thousands of dollars if you had to purchase expensive courses, and now you can have them all for FREE. See you there.

So now we know what lots are and the advantages / disadvantages of Leverage. And now is the right time to answer this important question – what is the value of 1 Pip in the currency pair I am trading?

For currency pairs where USD is the base currency like USD/CAD and USD/JPY the following is the value of 1 pip assuming that your broker account is open in US Dollars.

• Trade of 1 Lot (1), 1 pips value is $10
• Trade of 1 Mini Lot (0.1), 1 pip value is $1
• Trade of 1 Micro Lot (0.01), 1 pip value is $0.1
• Trade of 1 Nano Lot (0.001), 1 pip value is $0.01

So now you know the value of 1 pip. So if you are trading with 1 Lot, and you are in profit by 5 pips, actually your overall profit is $50. 1 pip is $10, so 5 x $10 is $50.

If you are trading with 2 Lots instead of 1, your profit is $50 x 2 (lots) = $100.

Ok, but what if I am trading EUR/USD, where the base currency is not US Dollar? In this case we need to convert the value of $1 into Euro using the current actual price of the pair. So let’s assume that the current price of EUR/USD is 1.3070.

So if €1 is equal to $1.3070, then $1 equals how much? This is simple maths. So (1 x 1) / 1.3070 equals € 0.7651. So 1 pip actual value is € 0.7651 in the EUR/USD pair.

Again if you are trading with 1 Lot for EUR/USD, then 1 pip move is equivalent to € 7.65.

Practical Approach
To be honest I don’t go into all this mathematics prior entering as trade, since by the time I finish calculating, the price would have already moved considerably. So I just always calculate with US Dollars in mind.

For sure it is a straight forward mathematics ($1, $10 etc.), and at the end of it the pip value of the other currencies will be less than the pip value of the US Dollars, that is less than $10, $1 etc. So I will be risking less, although I will be earning less. But protecting your capital is of extreme importance in Forex. So stick with this in mind and you will do fine.

If you are a beginner and you want to learn the basics of Forex Trading or you want to learn the core of Technical Analysis with detailed examples please visit the Forex Trading Courses page. You will find huge amount of valuable information and video tutorials worth thousands of dollars if you had to purchase expensive courses, and now you can have them all for FREE. See you there.

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