Okay, so in this section you will learn what is a pip value and how to calculate a pip value. So what is a pip value? So a pip value in essence, is trying to answer the question. How much is one pip worth and to find that out? Right, you need to answer two questions number one: the lot size that you're trading and number two, the code currency of the currency pair. So let me explain number one the lot size so, as you know, right in the forex market, there are different lot sizes.

You know standard lot, mini lot, etc. So one standard lot right is actually equivalent to a hundred thousand units and it's worth ten dollars per bit. One mini lot is ten thousand units and it's worth a dollar a pip and one micro lot is a one thousand units which is 10 cent per pip or 0.1 dollars. A pip, and one thing to point out is 10 mini.

Lots is actually equivalent to one standard lot, because if you look at this 10 000 units, you multiply by 10, is hundred thousand units, so in other words, 10 mini lot is one standard lot. So, needless to say, 10 micro lots is equals to one mini lot. Right, a thousand units you multiply by 10 gives you 10 000 units, so 10 micro lots, 10 micro lots is one mini lot as well. Okay, so so bear this in mind - and this holds true only if your code currency is in u.s dollar, like euro dollar, aussie, dollar, new zealand, etc.

So clearly, right what? If your code currency is not in u.s dollar. So this is why we need to look at the second thing, which is your code currency. So let's say, for example, if the code currency is in euro, then one standard lot clearly is 10 euro a pip one mini lot. Is one euro a pip and one micro lot is 0.1 euro per bit makes sense all right so far so good.

So let's have a look at an example. You trade, euro usd and buy 2.3 standard lots. How much is the value per pip? So if you just you know, look at this, you know that 2.3 standard lot is equals to two standard lot and three mini log. That's one way to look at it or you can look at it as 23 mini lot.

That is the same thing so, depending how you want to look at this. Let's say: let's treat it as 23 mini lot. We know. One mini lot is worth one dollar per bit.

Okay, so clearly, 23 mini lot means it's 23 per pip and there you have it moving on next example: let's say you, trade, the pound against the aussie dollar and by 5.5 mini lots. How much is the value per pip? So again, just remember the two things i shared with you number one: what is the lot size? Trader? 5.5. Mini lots. Okay, great next thing: what is the code currency? Aussie? Dollar? Great you know, one mini lot is worth one dollar 5.5 mini lots means it's 5.5 dollars.

So what is the currency? The code currency? This is aussie dollar, so it's 5.5 aussie dollar per pip, okay, great. So that should be the answer. So if you look at the answer, it's 5.5, how do i know this because i did these slides and and uh? Clearly i don't know, what's the answer so yeah there you have it that's the answer. So all this actually would be useful to you.

If, right, let's say your, let's say right now: your account currency is in australian dollar and yeah 5.5 aussie dollar per that would make sense. But of course, as you know, there is no guarantee that the code currency will be the same currency as your account funding. Maybe you could find it in us dollar. You could find it in singapore dollars.

It could be different. So how do you actually translate this value into your own account currency if your own account currency is different from the code currency, so this is where we can take things a step further and to find out the pip value in your accounts currency. If the currency is different from the code currency, so again you need a few things number one. The lot size number two is the code.

Currency and number three is the exchange rate between the code, currency and your accounts currency. So let me give you an example, because example is your pay number one? Let's say you buy one standard lot of euro usd your account currency is in singapore dollars. The exchange rate between the usd and sgd is 1.3. How much is the value per peep? So, let's again right do this a simple exercise: you know one standard lot is a hundred thousand units.

Reynolds say: one standalone is worth ten dollar per bit: okay: 10 per bit, then you realize that your account currency is different from the code currency. So what now, so what you need to do is to to convert right usd into sgd. As you know, right now one usd is worth 1.3 sgd. So this means one.

Us dollar is worth one dollar 30 cents, singapore dollar. So if you want to convert this 10 us dollars into singapore dollars, i just take this multiplied by 1.3 and i have a figure of 13 singapore dollars. Sgg, okay and that's the answer right: the value property will be 13 singapore dollars per bit and there you have it right in case you want to know the kind of like the math breakdown is 10 usd per bit multiplied by 1.3, because it's the exchange rate Between us and singapore dollars and you get 13 singapore dollars per bid. Another example shall we to really hammer on this concept? You buy two standard lots of pound against the new zealand dollar.

Your account currency is in canadian dollars the exchange rate for new zealand. Canadian is 1.5. How much is the value per bit? So i'm going to give you five seconds to do this now. I'm just kidding five seconds too fast.

I'm gon na do this together with you and let's find this out, but you know kind of, like you know, pause this video and do it on your own. If you wish to, if not, i'm gon na walk you through how to do this step by step. So again, first thing: first, is the number of lots. We are trading two standard lots.

You know: that's equals to 20 new zealand dollar per pip. Okay, if you do not know why it's 20 go and look back at the earlier slide, so it makes sense. Your account currency is in canadian dollar exchange rate between new zealand and canadian. Canadian dollar is 1.5, so what i need to do is to find out how much is 20 new zealand dollar worth in canadian dollars.

How much is that very simple, just multiplied by the exchange rate, this prevailing exchange rate? Of course this is not a real number. I just came up with this. If you just look at the normal forex website, you will have you can find out. What's the prevailing exchange rate so 20 dollars, i multiply by 1.5.

It will give me right how much 20, or rather 20 new zealand dollars is worth in canadian dollars. An answer is 30. 30 canadian dollars per pip okay. So let's have a look: tada, okay, so so yeah.

So with that said right, let's do a quick recap. Number one, your pip value depends on a few things: the lot size, the code, currency and finally, right the exchange rate between the code, currency and your account currency. If they are different, if they are the same, then you just need the first two things and you can find out what is the pip value you.