What are Pips in Forex Trading and What is Their Value?

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When trading contracts for difference (CFDs), then the term “pip” comes up a lot – which begs the question, what are pips in Forex trading, and how do you calculate their value? That’s what we’ll break down in this guide.

Pip stands for the point in percentage. It represents a measure of the smallest change possible in the price of any tradable asset – the difference between the price when a position is opened and when it is closed.

How to Count Pips in Gold Trading

To count gold pips, you must first determine the entry price and the exit price. Then, all you need to do is a simple mathematical subtraction – the difference between the entry price and the exit price.

Side note: The Chicago Mercantile Exchange (CME), the main exchange for commodities, lists the price of gold to one decimal point. And that means that for XAUUSD, a 0.1 change in price is 1 pip. 

Let’s say you’ve opened a long XAUUSD position:

Entry price: 2000.5
Exit price: 2001.3
Gold pips: 2000.3 – 2000.0 = 1.2 = 12 pips

Remember, $0.1 = 1 pip. That means, $1.2 = 12 pips.

Note that most brokers and online trading platforms may list XAUUSD to two or three decimal points (for example 2010.25 or 2010.253). In this case, round off the gold price to one decimal place when counting pips.

How to Count Oil Pips in Trading

The process of counting oil (XBRUSD) pips isn’t that different from that of counting gold pips. You must first determine the entry price and the exit price. Then, proceed to do a simple mathematical subtraction – the difference between the entry price and the exit price.

However, unlike XAUUSD, the price of XBRUSD is quoted to 2 decimal points. This means that a 0.01 change in the price of XBRUSD is equivalent to 1 pip. Here’s an illustration of this:

Let’s say you’ve opened a long XAUUSD position:

Entry price: 80.55
Exit price: 80.85
Gold pips: 80.85 – 80.55 = 0.30 = 30 pips

Remember, $0.01 = 1 pip. So, $0.30 = 30 pips

Empirica Signals Pip Count Calculator

While some traders may always prefer to manually count the potential pips gained or lost in a trade, this can be cumbersome. So, to simplify things for you, we’ve created an intuitive pip counter calculator for you. You can use our pip counter calculator to calculate the number of Gold or Oil pips for a given trade.

All you need to input is the asset you’re trading, your trade position (long or short), the entry price, the exit price, and hit calculate.

Gold & Oil Pip Counter

How to Calculate the Pip Value in Trading

Now that you know how to count pips in commodities trading, the next logical question is: what is the value of one pip of gold (XAUUSD) or oil (XBRUSD)? 

Well, the value of one pip of any asset depends on the amount you’re trading – in lots – and the prevailing exchange rate.

Pip Value Calculator

So, you can count gold and oil pips, and you can calculate the pip value. Next, you need to know how much your potential profits or losses are, in monetary terms. All you need is to simply multiply the number of pips in a trade by the value of 1 pip. 

Alternatively, you can use a trading profit calculator to determine your potential wins or losses. In CFD trading, both Gold (XAUUSD) & Oil (XBRUSD) have the same pip value. For 1 lot, 1 pip = $10. To calculate your gold or oil CFD trading profits with the calculator, simply enter the lots you’ve traded or intend to trade, the number of pips, and hit ‘Calculate Profits’.

Forex Profit Calculator

About Empirica Signals

Empirica Signals is a premier Telegram signals provider specifically for gold (XAUUSD) and oil (XBRUSD) CFD traders. On average, subscribers enjoy over 1000 net pips monthly from over 30 trading signals.

Empirica Signals is dedicated to the philosophy of quality over quantity. Our traders focus on providing consistent and high-quality gold and oil trading signals to help you achieve your trading objectives. Whether you’re a beginner looking for simple trade structures or an advanced trader seeking to maximize your risk/return consider subscribing to Empirica Signals. But first, you can enjoy a 1-week free trial to see if it’s the best fit for you.

FAQs

What are pips in Forex trading?

Pip stands for the point in percentage. It represents a measure of the smallest change possible in the price of any tradable asset. Basically, it’s the difference between the price when a position is opened and when it is closed.

What is the value of gold (XAUUSD) pips?

The value of one pip of any commodity depends on the asset, and amount you’re trading – in lots. For gold and oil CFDs, the value of 1 pip, for 1 standard lot is usually $10. You can use Empirica Signal’s calculators to calculate to know all the potential outcomes of your trades.

What’s the difference between pips and points?

In trading, both pips and points are used to measure price changes. In the concept of gold (XAUUSD) CFD trading, a point is a fractional pip and is equal to a tenth of a pip – so, 1 pip = 10 points. However, for oil (XBRUSD) CFD trading, 1 pip = 1 point. Note that the concept of points vary widely in financial trading depending on the asset you’re trading.