How To Calculate Pips On MT4 – Guide For Forex Beginners
New forex traders often need help getting used to technical terms and calculations. All these technicalities and complex calculations are part and parcel of forex trading. But that’s not a matter of concern if you are prepared to learn and practise more. As a beginner and novice trader, you need to spend a little time and effort learning these forex terms and concepts. Counting and calculating pips are important concepts in forex trading. But you can count pips easily using a profit calculator forex on the MT4 platform. With this article, we will guide you through all the steps you need to take to use a pip and other calculators for trading.
Thank you for reading this post, don't forget to subscribe!Concept of Pips in Forex
Those who have started to take the trading lessons must be well-versed in the concept of pips in forex. Still, we will go through it once again for a better understanding. Pip is the unit of measurement for the smallest price change in a currency pair. Percentage in point or price interest point is the full form for pips in forex. Pip is measured at the 4th decimal point/ 0.0001 for all currencies except the Japanese Yen, where one pip is 0.01. Pip is the most basic concept for forex trading, and it plays a major role in all calculations, from placing trades to calculating profits.
The formula for the Calculation of Pips
The formula used for pip calculation is as follows.
Pip Value = (One Pip/Exchange Rate) x position size / lot size
Using this formula, you can calculate the value of pips for any currency you want to trade in. This formula is mostly used to calculate profits in forex as traders often mention their profits as the number of pips earned in a trade. For some of us, the formula might be easy to crack and apply. If the manual calculation of the pip value seems difficult, then using a profit calculator makes it easier to calculate the profit in the number of pips. However, those who find this formula difficult to calculate manually can still apply it easily with the help of trading calculators or forex calculators on trading platforms. A pip trading calculator can automatically apply this formula to give you accurate results for pip value in no time. Using a pip profit calculator is easy once you know the values you must specify.
- Trading instrument or currency pair you are trading with
- The base currency of your account
- Type of lot chosen to specify position size (standard, mini or micro)
- Number of lots
- Number of pips for which you want to calculate the value
Once you enter the details mentioned above into the Forex pip calculator, it will return the value, telling you how much base currency will be needed to earn a certain number of pips as profit. This can be calculated before a trade to plan the trade perfectly.
Two Methods for Counting Pips on MT4
Let’s look at three different methods to count pips on the MT4 platform for forex trading.
- Place 2 horizontal lines on top and bottom levels. Measure the distance between these two lines by subtracting the value of the lower line from the upper line. This method requires no additional forex tools, but it takes a lot of time to do this properly.
- The second method is to use the crosshair cursor on the MT4 platform. You must have used the mouse wheel for scrolling, but we will use it here for another function. You must go to an MT4 price chart and hover the cursor. Click the mouse wheel while doing this, and you will see the mouse crosshair cursor once you hear the click. If you fail to make it work, you have another simple way to activate the crosshair cursor. Simply click the crosshair feature on the line studies toolbar, and you are ready.
Once you activate the crosshair cursor, take it to the point on the chart for which you need to calculate the pip value. Left-click with the mouse and hold it down while dragging the cursor to the second point on the price chart. You will see three numbers appear on the right side of the cursor. The first number indicates the number of bars or candlesticks you crossed or the start and end of crosshair movement, 2nd number indicates the difference or disparity between the two price points, and 3rd number will state the actual price or value for the crosshair cursor.
Role of a Profit Calculator In Forex
This is a great era for forex traders as any complex and time-consuming calculations can be performed instantly using free trading tools and calculators. A profit calculator allows traders to get quick results with minimal effort, making trading easier and faster for the most part. Experienced traders may find it easy to count pips on MT4 manually. They are well-versed in old-school techniques and methods and might prefer to do it that way only. But once you take trading to the next level with a fast-paced trading style, manual calculations might not be feasible for trying modern trading techniques. Beginners will especially feel discouraged when trading involves complex and time-consuming calculations in the first place. They are constantly looking for an effortless and advanced trading experience so they can easily explore the market.
Final Words
In conclusion, we can clearly see that counting pips on MT4 becomes a lot easier when you have a pip trading calculator in your trader’s toolkit. The manual calculation can be a bit intimidating and challenging for an average beginner. But it can be performed easily using a profit calculator forex or pip profit calculator. Such trading tools and calculators make the trading platform beginner-friendly and appealing for new traders. All you have to do here is learn to use them properly, as they are essential components of success for a 21st-century trader.
