Forex Indicator #4: Pip Value Calculator
I’m sure we’ve been through this situation.
You’re new to the forex market and opened up a small account.
Since you have no clue how lot sizes work in forex, you say to yourself:
“Alright, let’s just buy 100 lots; what can go wrong?”
“I buy 1,000 shares all the time on stocks, shouldn’t hurt, right?”
But what you don’t know…
Every second, a pip that goes against you costs you $1,000.
Holy moly!
No wonder some new traders’ accounts suddenly disappear the moment they click that buy button.
Can you see how important it is to know your pip value?
So…
How exactly do you use this forex indicator to your advantage?
The answer?
We use this formula.
Risk amount / Stop loss in pips = Pip Value
For example, you have a $2,000 account, and you don’t want to risk more than 1% per trade.
It means that when your stop loss gets hit, you won’t lose more than $20.
Are you still following?
Next, let’s say that you’re about to enter a short trade on EURUSD, and the distance between your entry and stop loss is 100 pips.
What should your pip value be?
Let’s use the formula.
Risk amount / Stop loss in pips = Pip Value
$20 / 100 = Pip Value
= $0.20
There you go!
It means that your pip value should be $0.20 and that you should enter the trade with 0.02 lots.
At this point, I shared with you a ton of helpful forex indicators.
Some help you with your strategy, process, and even risk management.
So now I’m sure you’re asking:
“Where do we download these indicators?”
“What platform should we use?”
“Are you scamming us, and it’s paid?”
Don’t worry.
I’m a man of my word.
So…
