Can anyone tell me how the “point value in $” is calculated for different currency pairs?
it seems like this number can change over time, so the suggested numbers in the link below may not be useful?
you always need to use the current market rate to get the point value in USD for non-USD pairs
Let’s say you need the point value for EURCAD. It is 100,000 CAD of quote currency. Since the current CADUSD rate is 0.764 at the moment, the point value to set in SQ is 76,400 USD
OK this topic is exactly what I have been wondering about. I am currently developing strategies for USDMXN. Upon the first run I immediately realized that something was wrong when I saw strategies that would return millions of dollars over the last 10 years. So, I identified 2 issues with my data setup:
1. Point value was set at $ 100,000. All my research led me to believe it should be 100,000 * (1/20.48) = $ 4881 (approximately)
2. Spread was set at 3. Looking at many dealers it moves between 10 and 20 pips. So I set it to 15 pips.
Can anybody here please confirm or correct?
yes, I know, it can only work with low spread brokers. Actually I found out that it varies a lot. During the busy hours it can be around 6 pips. Also note that I already had the suspicion that this pair would not be a major earner. But, as I like to say: every little bit helps.
But just to be sure: was my computation of point value for USDMXN correct?
I set it to 4881.
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