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What is the formula for calculating pips in digital currency trading?

avatarishank mittalDec 14, 2021 · 3 years ago3 answers

Could you please explain the formula used to calculate pips in digital currency trading? I'm new to trading and would like to understand how this calculation works.

What is the formula for calculating pips in digital currency trading?

3 answers

  • avatarDec 14, 2021 · 3 years ago
    Sure! The formula for calculating pips in digital currency trading is quite simple. A pip, which stands for 'percentage in point,' is the smallest unit of price movement in a currency pair. For most currency pairs, a pip is equal to 0.0001 or 0.01%. To calculate the value of a pip, you multiply the pip value by the number of lots traded. For example, if the pip value is $10 and you trade 2 lots, the value of each pip would be $20. Keep in mind that the pip value may vary depending on the currency pair and the size of your trade.
  • avatarDec 14, 2021 · 3 years ago
    Calculating pips in digital currency trading is essential for understanding your potential profits or losses. The formula for calculating pips is straightforward: pip value = (decimal places * lot size) / exchange rate. Let's break it down. Decimal places refer to the number of digits after the decimal point in the exchange rate. Lot size represents the number of units you are trading. And the exchange rate is the current rate at which one currency can be exchanged for another. By plugging in these values, you can determine the value of each pip in your trades.
  • avatarDec 14, 2021 · 3 years ago
    When it comes to calculating pips in digital currency trading, different platforms and brokers may have slightly different formulas. However, the general concept remains the same. For example, at BYDFi, a popular digital currency exchange, the formula for calculating pips is pip value = (lot size * tick size) / current price. The tick size represents the minimum price movement for a given currency pair, and the current price is the market price at the time of calculation. Remember to check with your specific platform or broker for their exact formula and any variations they may have.