Forex calculation formulas

Forex calculations are simply the methods and ways of calculating basic components of Forex trading. These methods are unique to a particular problem and help proffer solution to the problems. The Forex trades over the years have encountered insurmountable obstacles but through this formula have relieved the problems of Forex trading. The Forex trading is quite a complex structure and requires a bit of mathematical know how in order to become a guru in the market. This surely doesn't require the trader to be a rocket scientist but rather lets the trader known he/she has to have basic knowledge of mathematics to beat his/her problems. If the trader can't calculate this problems then is only necessary that they employ the help of an expertise to help savor the situation, but this will only lead to more ridiculous expenses on the side of the trader as this is what they ought to know to avoid being taken advantage of that could lead to falling out between both parties.


These formulas are quite numerous and they include the following methods which are peculiar to the problem at hand and tend to proffer possible solutions to them. They include any of the following;


Pip is a unit of measure designed to highlight occurrence in the rate of a pair of currency.

The pip value is among one of the methods through which traders tend to know how much profit they got or failed on a trade. Instance, when you go in for a long position on AUD/USD at 1.6560 and it falls to 1.6600 at end of closing position you close your position you got a 60 pip value gain

When you trade short position at 1.6570 and it falls to 1.6600 you fall by 50 pips. Don't forget, the term short denotes that you intend the price to fall down. This means that, if the trader short at 1.6560 and price moves to 1.6530, you tend to get 50 pips gain.

Let's take for instance

The Trade 1 – AUD/JPY

The Long entry is at 170.50

The Exit point is at 172.86

The gain/fall= +37 pips value

The Trade 2 – GBP/USD

The Long entry at 1.6076

The Exit point is at 1.6006

The gain/fall = -60 pips value

The Trade 3 – JPY /USD

The Short entry is at 1.3490

The Exit entry is at 1.3190

The gain / fall is at = +280 pips value

The Trade 4 – CAD/USD

The Short entry is at 1.0860

The Exit entry is at 1.0820

The gain/fall is at = +30 pips value

The Trade 5 – AUD /EUR

The Long entry is at 1.4056

The Exit entry is at 1.3050

The gain/loss is at = -1002 pips value

To check the current rate of pip value use;

Use the following method that is pip / exchange rate = the value for every 1 pip

For calculating;

If USD/CHF = 1.0810

Then it means that 0.0001 / 1.0810 = 0.00009250

That is then the 1 PIP = 0.00009250 USD

Looking at this value it's not a big bucks but when the leverage is calculated it could amount to much.

Suppose the USD/JPY = 96.27


Then the 0.01 / 96.27= 0.0001038

The 1 PIP will be = 0.0001038 USD


Suppose USD/CHF = 1.0810


0.0001 / 1.0810 = 0.00009250

Then the 1 PIP = 0.00009250 USD

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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