Forex Trade: leverage, pip value and swap calculations

I entered a trade yesterday (27th November, 2017) on the GBP/JPY. My account currency in Euros. Let us understand the mathematics behind the trade and how to calculate various Forex values manually.

Currency Pair: GBPJPY  ‘Base currency’ is GBP and the ‘Quote currency’ is JPY.
Current price: 147.80   JPY 147.80 for 1 unit of GBP Quoted in JPY
Spread – BID/ ASK : 147.771 / 78  (1.?, average Spread 1.39)
Account Currency : EUR
Current Conversion Price: GBP/EUR = 1.1148 that is, the GBP/JPY trade will result in JPY

Position Size:

100,000 Lot size (*) Account exchange rate = Trade value in account currency (i.e. EUR €):
100,000 * 1.1148 = € 111,480

Pip Value calculation:

Pip value= 7.57
Pip Value = (Pip in decimal places * Trade Size) / Market Price
Trading 1 lot of GBPJPY with an account denominated in EUR
One pip in decimals = for JPY 0.01, (all other currencies has four place decimals i.e. 0.0001),
Trade Size = 100,000,
Current Conversion Price: EUR/JPY Exchange Rate = 132.009 Yens
[0.01 * 100,000] / 132.009 =7.5752 ( Each pip is worth JPY 7.5752)

For metals, you calculate tick value: Tick Value = [Tick in decimals (0.01)] * [Number of Oz]
Example: Trading 1 lot (100 Oz) of GOLD with an account denominated in USD
[0.01] * [100] = 1 (Each tick is worth $1)

Currency conversion: Currency From GBP to EUR
Amount: 100,000
Current Conversion Price: GBP/EUR is 1.1271
Convert Value: [100,000] *[1.1271] =112,710

Swap Long rate: -1.864
Swap/rollover fee is calculated according to whether your position is long or short for a position open overnight. It is interest rate differential between the two currencies of the pair. Swap = (Pip Value) * (Swap Rate) * (Number of Nights) / 10
Swap Short rate:-6.091 Trading 1 lot of GBP/JPY (short trade) with an account denominated in EUR
1 lot = 100,000, Pip value = 7.55452 , Swap rate = -6.091 , Number of nights = 1

Swap Long calculations: -1.41 Current Conversion Price EUR/JPY: 132.058 , Swap = (Pip Value * Swap Rate * Number of Nights) / 10
= (7.55452) * (-1.864)* (1)/10 = – 1.4081 or -1.41 (Negative rollover value means, have to pay )
Swap Short rate: -4.6

Minimum price fluctuation: 0.01  Two decimals for JPY pair, all other pairs four decimals

Trade Commission: 10.0503
Commission Each Side = (trade size * $45 per million traded) account currency exchange rate
Trading a standard lot 100,000 GBP/JPY ( account currency in €)
(0.000045) * (100,000)= £4.50 (Base currency of the pair traded)
Convert to EUR by dividing by EUR/GBP rate 0.8951
Commission each way 4.5/.8951= € 5.0273 (or both €10.050)

Margin calculations:
Required Margin for trade = [Trade Size] / [Leverage] * [account currency exchange rate] (if different from the base currency of the pair traded)

This trade of 1 standard lots of GBP/JPY using different leverage ratios, with an account denominated in EUR.
• Trade size: 100,000 , Account currency exchange rate: 1.1148
Case 1• Required Margin 1:1 : 100,000 / 1 * 1.1148 = € 111,480 +10.050
Case 2• Required Margin 1:50 : 100,000 / 50 * 1.1148 = € 2,229.6 +10.050
Case 3• Required Margin 1:100:100,000 /100 * 1.1148 = € 1,114.8 +10.050

Margin calculation for Metals:
Required Margin = [Trade Size (0z or unit)] / [Leverage] * [Market Price]

Example: Trade of XAU/USD 1 lot of GOLD using 1:100 leverage with an account denominated in USD.
Trade size = 100 Oz , Market price = $1294.66
Required Margin: [100] / [100 * 1294.66] = $1294.66 + commission
If account currency is EUR :

Current Conversion Price (EUR/USD): 1.1881
Current Price: (GOLD in USD) : 1294.66
Required margin: (EUR) : 100 / 100 * 1294.66 = $1294.66
1294.66/1.1881= € 1089.6894 + commission

Another Quick Calculation of Profit for long trade of EURJPY Pair :

Pair: EUR/JPY , Trading account currency: USD

Price: Buy EUR/JPY = 164.09 and sell when EUR/JPY = 164.10,  and USD/JPY = 121.35

Strategy: It is a strong uptrend on 1 Hour chart, so we will go long i.e we will Buy. But technically, Long EUR and short JPY currencies,

Buy-to-Open EUR/JPY = 164.09 and Sell-to-Close when EUR/JPY = 164.10, and this means buying 1 EUR for 164.10 JPY

Size: Standard lot of 100,000 units

Profit in JPY pips = 164.10 – 164.09 = .01 yen = 1 pip (1 JPY pip = .01 yen., all other currencies 1 pip=0.0001)

Total Profit in JPY pips = 1 × 100,000 = 100,000 pips.
Total Profit in Yen = 100,000 pips/100 = 1,000 Yen

Profit in USD, you divide by the quote currency’s conversion rate: USD/JPY = 121.35

Total Profit in USD = 1,000/121.35 = 8.24 USD.

[From pips ie., JPY/USD = 0.00824, to convert pips in yen to domestic currency USD]: Total Profit in USD = 1,000 × 0.00824 = 8.24 USD.

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