The term used in currency markets to represent the smallest incremental move an exchange rate can make. Depending on context normally one basis point (0.0001 in the case of EUR/USD, GBP/USD, USD/CHF and 0.1 in the case of USD/JPY).
FOREX EQUATIONS
The equation for EUR/USD, GBP/USD, and AUD/USD is as follows:
P/L = (Opening Rate - Closing Rate) x Lot Size x Number of Lots
The equation for USD/JPY, USD/CHF, and USD/CAD is as follows:
P/L = (Opening Rate - Closing Rate) / Closing Rate x Lot Size x Number of Lots
For standard accounts, 1 pip results in $10 profit/loss in EUR/USD and GBP/USD, approximately $9 in USD/JPY and $8 in USD/CHF.
For mini accounts, 1 pip results in $1 profit/loss in EUR/USD and GBP/USD, approximately $0.90 in USD/JPY and $0.80 in USD/CHF.
MARGIN REQUIREMENT
The table below shows an example of the margin required for each contract size in the major currency pairs based on spot rates of 1.2100 for EUR/USD and 1.7220 for GBP/USD. Margin required is subject to change in market rate. In a live account, the margin required for each non-dollar based currency pair will be converted to U.S. Dollars, in real-time, at the prevailing market price for that pair. Once the equity in an account falls below the required margin, then all open trades will be closed at the prevailing market rate.
Currency Pair
1K Units/Lot
5K Units/Lot
10K Units/Lot
50K Units/Lot
100K Units/Lot
EUR/USD
$12.10
$60.50
$121
$605
$1,210
USD/JPY
$10
$50
$100
$500
$1,000
GBP/USD
$17.22
$86.10
$172.20
$861
$1,772
USD/CHF
$10
$50
$100
$500
$1,000
The table uses 100:1 leverage for purposes of calculating the margin requirement. The margin requirement will vary based on the level of leverage used.
Please note: Advanced Futures asks that you consider the risks associated with increasing your leverage. A relatively small market movement will have a proportionately larger impact on the funds you have deposited or will have to deposit. This may work against you as well as for you. You may sustain a total loss of initial margin and you may be required to deposit additional funds to cover a short margin position. FLEXI Leverage is available for self-directed accounts only (does not apply to managed accounts).
*Pip spreads are valid on FX Solutions accounts
only and subject to change without notice.
