Pip value

The money behind the movement. The size of one pip multiplied by the number of units a position covers gives the value of one pip in the currency the pair is quoted in, which is the counter currency. Where the account is held in some other currency, that figure is converted at the prevailing rate. Three inputs therefore decide it: the pip size of the instrument, the size of the position, and the rate between the counter currency and the account currency.

Whether the figure holds still depends on the third input. When the counter currency and the account currency are the same, the value of a pip is fixed for the life of the position and the familiar round figures apply. When they differ, the conversion rate moves while the position is open, so the money value of one pip drifts, and a position's result per pip at the close is not the figure it carried at the open. On pairs where the account currency is the base rather than the counter, the value moves inversely with the rate itself.

This is the input every sizing calculation rests on, which is why the errors in it propagate. Carrying the standard figure quoted for one standard lot across to every instrument is the frequent one: it holds only where the counter currency matches the account currency. Applying a four decimal pip size to a pair quoted to two decimal places is the other, and it produces a figure wrong by a factor of one hundred rather than by a rounding. Neither error is visible on the ticket, since both produce a plausible looking number.