Forex Signals

3-Converting Profits and Losses in Pips to USD

To calculate your profits and losses in pips to your native currency, you must convert the pip value to your native currency. The following calculations will be shown using USD as an example.

When you close a trade, the profit or loss is initially expressed in the pip value of the quoted currency. To determine the total profit or loss, you must multiply the pip difference between the open price and closing price by the number of units of currency traded. This yields the total pip difference between the opening and closing transaction.

If the pip value is USD, then the profit or loss is expressed in USD, but if USD is the base currency, then the pip value must be converted to USD, which can be found by dividing the total pip profit or loss by the conversion rate.

Example—Converting Pip Values to USD.

You buy 10,000 Canadian dollars with USD, with conversion rate USD/CAD = 1.100. Subsequently, you sell your Canadian dollars for 1.1200, yielding a profit of 200 pips in Canadian dollars. Because USD is the base currency, you can get the value in USD by dividing the value by the exit price of 1.12.

10,000 CAD x 200 pips = 2,000,000 pips total. Since 2,000,000 = 200 Canadian dollars, your profit in USD is 200/1.12 = 178.57 USD.

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