Margin and pip calculator

What are pips and how do they work?

Pips are how you measure movement in a currency pair, standing for ‘point in percentage’. Sometimes, you might hear pips referred to as ‘points’. The value of a pip changes depending on the pair you are trading.

In most forex pairs, one pip is equal to a single-digit move in the fourth decimal place (0.0001) of the pair’s price. So it’s equivalent to 1/100 of 1%. If EUR/USD moves from 1.1732 to 1.1737, for example, it has gone up five pips.

In currency pairs that include the Japanese yen (JPY), though, the second digit after the decimal point is the pip. Here, a pip is equivalent to 1/10 of 1%.

Using these small units to measure price movement enables traders to profit from relatively small price movements.

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How does the forex pip calculator work?

The forex pip calculator works by multiplying the size of your position by the value of a single pip, then converting that figure into your chosen base currency. It also calculates your total required margin, by dividing the total size of your position by your chosen market’s margin factor.

You can use the pip calculator to see precisely how much you’ll make or lose for each point of movement in your underlying market – as well as how much you’ll need to deposit to open a position.

Find out more about calculating margin

Fractional pips

In addition to the standard pip, most forex brokers also offer ‘fractional pip pricing’ by adding an extra fifth decimal place to their quotes. As well as enabling tighter spreads, these can give you a better understanding of a currency price’s movements.

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