Direct answer
Pip value “for Deposit Currency” is the amount of account currency you gain or lose when price moves by exactly one pip for a specific forex pair. The calculation starts with the pip value in the pair’s money denomination (often tied to the quote currency), then converts that amount into your deposit currency using a relevant FX conversion rate. Because different brokers and platforms may apply different conventions (pip size, lot definition, or conversion timing), you should treat the formula as a method that you can verify with your provider’s stated assumptions.
Mechanism: define the moving parts
A forex pair quotes the price of one currency against another. Write the pair as Base/Quote (for example, EUR/USD means Base = EUR, Quote = USD).
Define these inputs (assumptions must be explicit):
- Pip size: the price increment that equals one pip. In many major pairs, pip size is 0.0001 for most pairs and 0.01 for pairs where the quote price is quoted with two decimals (for example, many JPY crosses use 0.01 as one pip).
- Position size: usually expressed in lots. A common convention is 1 standard lot = 100,000 units of the base currency, but providers can use different lot sizes.
- Pip move in price: one pip means the price changes by pip size.
Step 1: compute pip value in the quote-denomination currency (conceptual)
For a Base/Quote pair, a one-pip price move corresponds to a change in the value of the position measured in the quote currency. A simple way to express this is:
Pip value (in Quote currency) = (Position units in Base) × (pip size / Quote price)
Where “Quote price” is the current (or assumed) exchange rate used for the calculation.
Note the logic: when price moves, the Base value translated into Quote currency changes; dividing by the Quote price converts a price increment into a currency amount consistent with the pair’s quotation.
Step 2: convert Quote-currency pip value to Deposit Currency
If your deposit currency is the same as the Quote currency, then:
- Pip value (in Deposit currency) = Pip value (in Quote currency).
If not, convert it using an FX rate that links Quote currency to Deposit currency:
Pip value (in Deposit currency) = (Pip value in Quote currency) × (Conversion rate from Quote to Deposit)
If the conversion rate is quoted in the opposite direction, invert it. The key is to use a consistent direction: the multiplication should yield an amount denominated in the deposit currency.
Evidence or example: show the workflow with explicit assumptions
Assume (for the example only):
- Pip size = 0.0001
- 1 lot = 100,000 units of Base
- Position = 1 standard lot
- Pair = Base/Quote = EUR/USD (so Quote = USD)
Example flow (no live prices)
- Compute Pip value in Quote (USD) using:
- Pip value (USD) = 100,000 × (0.0001 / Quote price)
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If Deposit Currency is USD, that USD amount is the pip value you want.
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If Deposit Currency is, say, JPY, you convert USD → JPY:
- Pip value (JPY) = Pip value (USD) × (USDJPY conversion rate)
This shows why pip value depends on the conversion rate and on the pair’s exact quotation convention.
Limitations and failure modes (material things that can break the result)
- Pip size conventions differ: Some pairs use 0. 0001, others use 0. 01. If you use the wrong pip size, your pip value will be off by a factor of 10, 100, or more. 2) Lot size conventions may differ: “Standard lot” is commonly defined, but a provider could use different contract specifications. Verify the units your provider uses for 1 lot. 3) Conversion direction matters: Converting Quote → Deposit requires the correct FX direction. Using the inverse rate produces a systematic error. 4) Which price is used for the “Quote price” step: The formula uses a Quote price to translate pip movement into a currency amount. If a calculator uses bid/ask/mid or a fixed reference price, results can differ even with the same pair and position. 5) Counterexamples for non-typical quotation: Some instruments are not simple spot FX (for example, CFDs with contract multipliers).