Direct answer: what “pip value” means for CHF crosses
Pip value is the monetary value of a 1-pip price move for a specific forex position size. For CHF crosses (pairs where CHF is not paired with the account currency directly), the pip value is usually computed in the quote currency first, then converted into your account currency.
Mechanics: the core steps and formulas
- Start with the pair definition A forex quote like A/CHF means:
- A is the base currency
- CHF is the quote currency If your position size is in lots, you must also know the contract units that your platform uses (commonly a “standard lot” is 100,000 units, but you should verify your specific contract size). Assume:
- Contract size = U units of the base currency per 1 lot
- Lot count = L
- Position base units = U × L
- Decide the pip size for the pair “1 pip” is defined by the decimal convention of the instrument. For most FX pairs quoted with 4 decimals, a pip is 0.0001; for pairs quoted with 2 decimals on the relevant price leg, a pip is often 0.01. Assume the pip increment for your CHF cross is ΔP.
Material limitation: different instruments and providers can use different decimal formats, so you must confirm the pip increment that applies to the exact pair you trade.
- Compute pip value in the quote currency For a base/quote pair of the form A/CHF, a pip move changes the quote-currency amount per base unit proportionally to the pip increment. Under the common linear approximation used for pip valuation:
- Pip value (in quote currency, CHF) = (Position base units) × ΔP That expression assumes the pip is measured on the A/CHF price and that the position is sized in base units.
If your pair is quoted as CHF/A instead (CHF is the base currency), the pip value direction changes because the pip move now affects the quote currency differently. In that case, compute pip value in the quote currency (A) using the corresponding pip increment on CHF/A and your base-unit exposure, then convert as needed.
- Convert pip value into your account currency If your account currency is not CHF, you convert the quote-currency pip value into account currency.
Two common routing cases:
- If you can directly quote CHF to your account currency (CHF/ACC or ACC/CHF), convert using that rate.
- If direct CHF→ACC quoting is not available in your platform’s symbol list, you may need a multi-step route (for example, CHF→B and B→ACC). A “route” is just a chain of conversions; each step uses the pip value from the previous step as an amount.
Assume:
- Account currency = ACC
- Conversion rate used = R (quoted so the formula matches your direction) Then:
- Pip value (in ACC) = Pip value (in CHF) × R
Important limitation: providers differ in whether they use mid-market rates, last traded rates, or executed conversion rates for the valuation basis. Pip value formulas describe the mechanism; the exact realized valuation can differ when execution and fees enter.
Evidence or example: worked calculation with explicit assumptions
Assume the following (for illustration only):
- Pair: GBP/CHF (GBP = base, CHF = quote)
- Pip increment for this pair: ΔP = 0.0001
- Lot count: L = 1
- Contract size: U = 100,000 base units per lot
- Therefore position base units = 100,000
- Pip value in CHF = 100,000 × 0.0001 = 10 CHF per pip
Now assume your account currency is USD and you have a conversion rate of CHF→USD such that 1 CHF = 1.10 USD (denote this as R = 1.10 USD per CHF).
- Pip value in USD = 10 CHF × 1.10 USD/CHF = 11 USD per pip
Failure mode to watch: if the available conversion quote is given as USD/CHF instead of CHF/USD, you must invert it (1 CHF = 1 / (USD per CHF) depending on how the rate is displayed). Using the wrong orientation is one of the most common causes of incorrect pip value.
Limitations and risks: where calculations usually go wrong
- Pip definition mismatch: the pip size ΔP can differ by instrument formatting. Confirm the decimal rule for the exact CHF cross.