Trade Forex Trading

How Many Dollars is a Cent PIP? - Pip Definition for Cent Account Explained with 3 Examples

Currency pair movement in fx trading is calculated using pips, when trading one Cent lot the pip movement is equivalent to $0.01 dollars or 1 Cent like displayed in the exemplifications below:

How to Calculate Pip value in a Cent Account

For Cent accounts, figure pip profit or loss this way. Count the pips moved by the pair. Multiply by 0.01 dollars or one cent. That's the pip value for Cent lots.

One pip represents the smallest movement in forex trading and is used by traders when dealing with currencies. A movement of 1 pip in Cent contracts or lots amounts to $0.01 or 1 cent (100 currency units * 0.0001 = $0.01 or 1 cent).

How to Calculate Profit and Loss in a Cent Account

For Example if the EUR/USD currency pair heads from 1.2000 to 1.2001 - this is equivalent to one pip - a pip is the 4th decimal place in the forex quote.

The profit or loss will be:

1.2001 - 1.2000 = 1 pip

1 pip* $0.01 or 1 Cent per 1 pip = $0.01 or 1 Cent

Hence, a 1 pip movement for a Cent lot is equivalent to $0.01 or 1 Cent.

If the FX trade moves favorably in the sequence of the transaction direction, the FX trader realizes a gain of one US Cent ($0.01). Conversely, should the transaction move contrary to the established trade direction, the trader will incur a loss equivalent to one US Cent ($0.01).

Illustrative Example 2: For instance, if the EUR/USD currency pair moves from the 1.2000 level to 1.2050 - this movement constitutes 50 pips - a pip is defined as the fourth decimal place in a forex quotation.

The profit or loss will be:

1.2050 - 1.2000 = 50 pips

50 pip* $0.01 or 1 Cent per 1 pip = $0.5 dollars

Therefore, 50 pips move for Cent lot is equal to $0.5

If the FX trade moves in your favor, you gain $0.5 profit. If it goes against you, you lose $0.5.

Example Three: For instance, if the EURUSD exchange rate advances from 1.2000 to 1.2100, this represents a 100-pip movement: a single pip is defined as the movement in the fourth decimal place of a forex quote.

The profit or loss will be:

1.2100 - 1.2000 = 100 pips

100 pip* $0.01 or 1 Cent per 1 pip = $1

Hence, 100 pips move for Cent lot/contract is equivalent to $1

If the trade transaction heads in the direction of the FX trade, the trader will earn a profit of $1. If the trade transaction heads against the direction of the FX trade, the trader will make a loss of $1.

How to calculate Cent Account Pip Value and Profit and Loss in a Cent Trade Account.

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