Forex trading is all about making profits by buying and selling currencies. As a forex trader, it is important to have a good understanding of the different terminologies used in the industry, and one of the most important ones is pips. Pips are the smallest unit of measurement in forex trading, and they are used to calculate the profit or loss of a trade. In this article, we will discuss how to calculate pips in Forex Trader Pro.
What are pips?
Pips stand for “percentage in point” and they are the smallest unit of measurement in forex trading. A pip is the fourth decimal place in a currency pair, except for the Japanese yen, where it is the second decimal place. For example, if the EUR/USD pair is trading at 1.1303, then the third decimal place (0.003) is the pip.
Pips are used to calculate the profit or loss of a trade. For example, if you bought the EUR/USD pair at 1.1300 and sold it at 1.1330, then you made a profit of 30 pips (1.1330 – 1.1300 = 0.0030). If you bought the EUR/USD pair at 1.1330 and sold it at 1.1300, then you made a loss of 30 pips (1.1330 – 1.1300 = -0.0030).
How to calculate pips in Forex Trader Pro?
Forex Trader Pro is a popular trading platform used by forex traders to buy and sell currencies. To calculate pips in Forex Trader Pro, you need to follow these steps:
Step 1: Open the Forex Trader Pro platform and select the currency pair you want to trade.
Step 2: Look for the bid and ask prices in the platform. The bid price is the price at which you can sell the currency pair, while the ask price is the price at which you can buy the currency pair.
Step 3: Calculate the spread, which is the difference between the bid and ask prices. For example, if the bid price is 1.1300 and the ask price is 1.1303, then the spread is 3 pips (1.1303 – 1.1300 = 0.0003).
Step 4: Determine the lot size of your trade. A lot is the standard unit of measurement in forex trading, and it represents a certain amount of currency. For example, a standard lot is 100,000 units of the base currency, while a mini lot is 10,000 units of the base currency.
Step 5: Calculate the value of a pip. The value of a pip depends on the currency pair you are trading, the lot size of your trade, and the exchange rate of your account currency. You can use the following formula to calculate the value of a pip:
Value of a pip = (Pip value in decimal places) x (Trade size in lots) x (Exchange rate of account currency)
For example, if you are trading the EUR/USD pair with a mini lot size of 0.1, and the exchange rate of your account currency is USD, then the value of a pip is:
Value of a pip = (0.0001) x (0.1) x (1) = $1
This means that for every pip movement in the EUR/USD pair, your profit or loss will be $1.
Step 6: Calculate your profit or loss. To calculate your profit or loss, you need to multiply the number of pips by the value of a pip. For example, if you bought the EUR/USD pair at 1.1300 and sold it at 1.1330, then your profit is:
Profit = (30 pips) x ($1) = $30
This means that you made a profit of $30 on your trade.
Conclusion
Calculating pips in Forex Trader Pro is a simple process that requires you to understand the basics of forex trading. By following the steps outlined in this article, you can calculate the profit or loss of your trades and make informed decisions about your trading strategy. Remember that forex trading carries a high level of risk, and it is important to have a good understanding of the market before you start trading.
