How to calculate a price of a point
A point is the smallest increment that can occur to security.
To calculate the price of a point, follow the following steps:
- Get the price of the security.
- Divide that price by the fraction by which the smallest unit of this security is calculated.
Multiply the result by the number of units each contract has
As an example if the tick price is USD4.2 per unit and the minimum contract is 10000 units, then the cost of the points of this contract would be USD42000, similarly, if one pip in forex trading costs EUR0.000081 per unit then a standard lot size of 100,000 then the cost of points of this lot would be EUR 8.1