Using a Pip Calculator: Tinkering With a Basic Forex Trading Tool

Jul 12 • Forex Calculator • 1706 Views • Comments Off on Using a Pip Calculator: Tinkering With a Basic Forex Trading Tool

One of the basic tools used in the forex trading game is the pip calculator.  Many forex traders make use of this tool even when they can very well do the computations themselves.  This tool allows them to make a more accurate analysis of their positions and determine whether or not to trade at certain currency values.  Although some would say that it is not necessary to use this tool, it still offers some benefits to traders on various points while putting together their trading strategy right up to making a decision on whether or not to trade a particular currency pair.

Profits and losses are made in the forex market everyday – these essentially happen in pips.  Pips are the smallest increment by which currency values move up or down.  Smaller pips can still result in large gains or losses depending on the amount of the lot being traded.  In US dollar denominated accounts, one pip is equal to $0.0001.  Trading a standard lot of $100,000 would have a pip value of $10.  On a currency pair like EUR/USD, trading at $1.3245 for one standard lot bought at $1.3235 would have a 10 pip gain valued at $100.  While a pip calculator might not be necessary for such a simple calculation, trading with other currency pairs with different pips and different pip values might not as easily be computed.

Using a pip calculator is highly recommended especially for forex traders dealing with different currency pairs in currencies other than that of their trading account.  As they can easily access these calculators online, there is no reason for them not to take advantage of such a facility to make their trading less complicated. Cross currency pip value computations can easily be done through free calculators that can be found online.  Most of these are hooked up to live currency values so forex traders need not do their own research on current currency values to be able to come up with pip calculations.  In most cases, simply entering the currency pair would yield pip values.

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These online calculators are flexible too.  Forex traders who are trading with non-standard lot sizes would also be able to use a pip calculator by simply entering their specific lot sizes.  Although most online calculators automatically generate currency values, there are some that allow forex traders to enter their own values to calculate pip values.  This normally happens when forex traders want to find out how profitable a particular order could be as currency prices fluctuate.  This and other forex trading calculators and tools available online make it much simpler for those trading in the forex market to make their trading decisions quickly based on more accurate information and analysis.

Trading in the forex market is not a get-rich-quick scheme.  Forex traders have to put in the elbow grease and do some analysis in order to make some profits – even then, there are no guarantees that there will be huge profits in one single trade.  It would not hurt to get some help with the free forex trading tools like a pip calculator online.

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