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How to Calculate Cross Currency PIP Value - Pip Value Forex

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Published on Dec 31, 2011

http://tinyurl.com/77aeo5l

How to Calculate Cross Currency PIP Value - Pip Value Forex

How to Calculate Cross Currency PIP Value


Currencies are the most heavily traded commodity in the world. With markets all over the world, any nation can issue currency which can be traded on the market, however, not all currency is traded with the same level of liquidity as other currencies. That is, the more popular the currency, the smaller the pip. A pip is the smallest price change that a currency can trade in. It is the convention to trade currencies in pairs, so the quoted price is actually the ratio of two different rates. The major cross currency pairs are EUR/USD (euro/US dollar), GBP/USD (pound/US dollar), USD/JPY (US dollar/Japanese Yen), and USD/CAD (US dollar/Canadian dollar). 1 Determine the cross currency you would like to calculate the cross currency PIP value for. Use the EUR/USD cross currency rate as an example. As of January 13, 2010 the quote for EUR/USD is 1.4512. 2 Identify the pip. Determine the next level at which you could purchase EUR/USD. Look at a EUR/USD price chart or ask your broker for the next highest price above EUR/USD 1.4512. The next level of price the EUR/USD quote can go to is 1.4513. 3 Subtract one price from the other (the direction does not matter). The calculation is: 1.4513 - 1.4512. The difference is .0001. This is the value of one pip for most highly traded currencies.

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