Pip Value Calculator

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Forex Calculators

To be profitable in Forex, you must concentrate on money management.

First use the Forex Position Size Calculator to determine your position size.

Then use this value in the Forex Risk Calculator to determine leverage, possible pip profit or loss, profit at target or loss at stop, reward/risk, percentage reward or percentage at risk.

Popularity: 3%

Calculated Pips Continued

It seems like the subject of how best to quantify a winning or losing trade is a hot topic.  There were a couple of differing opinions.

Two people agreed on the following example
If you buy 2 lots at the same time and you sold the first lot for a 10 pip profit and the second lot for a 5 pip profit, you could report a profit of 7.5 pips.  Pip Heaven believes this way works because we are interested in trading performance, not the exact amount of money you made.

Chad thinks that the best way to standardize performance regardless of account type is to report a profit to loss ratio.  His example explains why.   If a trader with a mini-account (10K) profits 30 pips on 10 lots, he can say he is +300 pips.  If a trader trading with the same risk but 1 standard lot (100K) profits 30 pips, he can only say he is +30 pips.  Both the mini-trader and the standard account trader profited the same amount of money, $300. 

Chad's example makes a lot of sense and clearly points to the faults in my pip calculation.  Though this is the case, I had standardized this way of calculating my performance therefore on a month to month basis, it still worked in telling me whether I did better or worse than other months.  So regardless of whether your method is believed to be right or wrong, if you are consistent in how you calculate performance, the results from any method should still tell you what you want to know.

Overall, most people agreed that using percentages are the best solution including Simon, Ed Mamula, Hermann, and molbio1.

Popularity: 2%

Why Even Calculate Pips

Here is a comment that was received yesterday about the pip calculation issue:

"If you buy 2 lots at the same time and you sell one lot for a 10 pips
profit and the second lot for 5 pips profit, in my book that would be
15 pips profit. From what I'm hearing in other people is that the
profit on this trade would be 7.5 pips…that doesn't sound right to
me. What do you think?"

So there are traders in two camps on how to perform pip calculation.  One camp says that the number of lots should not affect your pip calculation and the other says it should.  I truly don't know the answer to this but I think it's a moot point.  After all, most of us aren't reporting pips as a way to get people to sign up for a signal service, at least I'm not. 

I think the answer to this is brought up by Ed Mamula in which he thinks forex traders "have an odd habit of reporting how many PIPS they have gained or lost."  He says that what's important aren't PIPS but dollars and percentages.  Good point Ed.  Read Ed's thought's on this.

I bring up Chaffcombe the trader sometimes because I personally believe he is for real.  If you browse around his performance charts and discussions, he doesn't mention pips at all.  He's really concerned about the percentages.   http://www.futurestech.com.au/MonthlyReport_Jan2007.htm

So it will be my goal to start speaking in percentages more in the futures and not pips so much.  I still have to re-work my performance reporting to reflect this. 

Mark commented on this post and answers the question.   "Pips are a good way to discuss trading profits because they are independent of your risk profile." 

Popularity: 2%

My Pip Calculations Are Wrong

I received the following comment this evening regarding my pip calculation method.  He says:

"Most traders don't count multiple lots in with their pip total.  You use it to calculate profits, but not to calculate pips. If that was the case, I would have had over 40,000 pips last month."

I have to claim ignorance here.  I don't know how most traders calculate pip total.  I've seen it done both ways especially if they use multiple targets with multiple lots.  Nevertheless, I do agree with this poster and I don't want to be misleading in my calculations.  Therefore I am changing the language of my posts and also my trade history and performance statistics.  

This is an example of how I was calculating in the past:

If I went long the GBP/USD 3 lots at 1.9400 and closed the entire trade at 1.9430, I would have said that I gained 90 pips. 

This is an example of how I will calculate going forward:

If I went long the GBP/USD 3 lots at 1.9400 and closed the entire trade at 1.9430, I will now say that I gained 30 pips.

So I will now how to talk more about the amount of money I gained or lost instead of stressing how many pips I gained or lost.  I'm going to work in the next couple of weeks on adding more performance graphs to the site like equity curve, monthly profit/loss %, rolling monthly profit/loss %, and daily profit/loss %.  This is what chaffcombe does on his site.  

Popularity: 2%

This week PROFIT GOAL REACHED!

I carefully reached my profit goal in Week 4:

Week #	Pip P/L	Gross P/L	Total # of Trades	Total Winning Trades	Total Losing Trades	Total Even Trades	Avg. Winning pips	Avg. Losing pips
4	61	$506.8	18	9	7	2	19.8889	-16.8571

This week, I profited 61 p.  If anyone remembers, my goal when I started Rob Booker training was to make a total of 60 p each week.  Trading 1 lot at a time isn't going to allow me to do this for a living but increasing this to 3 or 4 lots will.  I personally feel that a lot of people go into trading forex (myself included) with the thought that they need to profit many many pips each week.  When I say many pips, I'm thinking over 200 or so pips a week.  I hear how many traders not unlike myself profiting over 400 p for a given week which is absolutely possible but you also have to be honest with yourself.  Can you consistently make 400 p a week? I don't think it is possible!  Imagine the additional pressure you're putting on yourself when you're expecting even 200 p a week.  I find that keeping a pip target low and then raising your lot count is a more realistic expectation.  

The above trades were all day trades.  I do not have any position trades open and really haven't in a long time.  My goal is to continue day trading and then find position trades on longer term charts.

Making 61 p isn't easy.  I made 18 trades, profiting on exactly half.  I was very careful today and hesitated to make a short AUD trade which would have hit my target (30 p had I made the trade) because I was at +51 p and was satisfied with ending the week here.  I did see another trade this morning though and took the chance of going long on the USD/CAD.  I was still very careful placing a tight stop and only looking to stay in the trade if it went a little my way  I got out of the trade quickly for a 10 pip profit bringing my total for the week at +61.

To be totally up front, I really haven't sent Rob Booker email in weeks nor have I been following his "Chart School" all that closely.   I've been discretionary trading all week just like last and I don't know if it is a coincidence or not that I have been profitable both weeks.  I'm not trying to apply any new techniques but just trying to become more intimate with the techniques and indicators that I already have.   I haven't stopped learning or exploring new techniques or indicators but it really is just for exposure and because I feel the need to learn new things regularly.

I'm away until Sunday and will be back then to get ready for next week.  I hope everyone caught some good trades this week.  Take care. 

Popularity: 9%

Top Market Moving Indicators

Like many Mondays, tomorrow probably won't be moved by the very latest economic release because there really aren't with 1 exception. At 9 a.m. tomorrow, the TIC report is released.  This report measures demand for US assets and could be yet another nail in the dollar but I'll be watching just to see if this is a report that would move the market in the future.  See Kathy Lien's study that puts TIC report at market mover #9 for first 20 minutes after release and #3 for the entire day.

I'm going to be releasing my Economic Release PDF again this week with comments.  It looks like Wednesday (US CPI) and Thursday (Bernanke Speaks) are possible US session movers and there are a couple of other important non-US releases like the BOJ Interest Rate Statement on Friday (1 am EST.)

In much of my reading, I stumble upon useful bits of information.  There was a study by Kathy Lien, an FXCM strategist, of the top market-moving economic indicators for the Dollar during the first 20 minutes following a release and for the rest of the day.  These are ranked from highest average pip range and are only for the EUR/USD.  Considering other pairs like the GBP/USD react more to these economic releases, the average pip range would be much higher.

First 20 minutes

1. Unemployment (nonfarm payrolls) 124 p
2. Interest rates(FOMC) 74 p
3. Trade balance 64 p
4. CPI 44 p
5. Retail sales 43 p
6. GDP 43 p
7. Current account 43 p
8. Durable Goods 39 p
9. TIC data 33 p

Daily

1. Unemployment 193 p
2. Interest rates (FOMC) 140 p
3. TIC data 132 p
4. Trade balance 129 p
5. Current account 127 p
6. Durable goods 126 p
7. Retail sales 125 p
8. CPI 123 p
9. GDP 110 p

It is interesting to note how the importance of economic reports actually changes over time.  For instance, here is FX Dealer importance of Economic Data as of 1997 and as of 1992.

As of 1997 

1. Unemployment
2. Interest rates
3. Inflation
4. Trade balance
5. GDP          

As of 1992

1. Trade balance
2. Interest rates
3. Unemployment
4. Inflation
5. GDP 

Popularity: 4%

Video Journal - 30 pip GBP trade this morning

Here is my +30 pip trade this morning.  Don't forget that I also had a -30 pip trade using the exact same logic but with the Yen.

Click [Read More] to see video.

[Read more]

Popularity: 5%

Journal Entry for 46 pip profit trade last night

Click [Read More] to see video of EUR/JPY Trade last night, my first +40 pip profit trade in a long time. 

[Read more]

Popularity: 2%

Asian Session May 8th

Journal Entry

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I decided to trade the Asian session and shorted the USD/JPY.  I was just stopped out at 0 profit/loss. 

I shorted the pair on a break of the support trendline and a break of RSI trendline.  It was good entry execution.  I waited for the price to break the trendline and then waited for the 15 minute candle to close.  After I was up 20 pips, I moved my stop to break even at 111.52.  My limit was still 111.05, right above a lower support line.  The trade was up as much as 28 pips where I typically would have closed the position.  Tonight, I wanted to show a little restraint and patience so I waited.  The pair never made it back down before stopping me out for a scratch.  

Should I have taken the 28 pip profit? Would you have?  

Popularity: 4%

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