Hi,
Right now I'm reading some ForexFactory threads on how to calculate pip value. I would like to make sure that given a stop loss at let's say 2x the ATR When it is hit I loose an exact percentage of my capital.
As far as I understand when I buy or sell EUR/USD my GBP is first converted to USD. Then the profit or loss depends on the relative value change of the dollar and the euro. This is all fine.
But in the meantime there will be a relative value change between the dollar and the GBP, and once I will close the transaction the money I (temporaraily) have in dollars will need to be converted back to pounds. So it seems like there are two transactions both ways: a GBP/USD and a EUR/USD one.
How do I factor this in to my calculation? Do I need to, or is my thought process incorrect? Not a lot seems to be mentioned about this aspect of the pip value.
(Please consider any possible correlation between EUR and GBP value irrelevant.)
Right now I'm reading some ForexFactory threads on how to calculate pip value. I would like to make sure that given a stop loss at let's say 2x the ATR When it is hit I loose an exact percentage of my capital.
As far as I understand when I buy or sell EUR/USD my GBP is first converted to USD. Then the profit or loss depends on the relative value change of the dollar and the euro. This is all fine.
But in the meantime there will be a relative value change between the dollar and the GBP, and once I will close the transaction the money I (temporaraily) have in dollars will need to be converted back to pounds. So it seems like there are two transactions both ways: a GBP/USD and a EUR/USD one.
How do I factor this in to my calculation? Do I need to, or is my thought process incorrect? Not a lot seems to be mentioned about this aspect of the pip value.
(Please consider any possible correlation between EUR and GBP value irrelevant.)