Pipette Vs Pip

5 In the quote EUR/USD = 1.42345, what is one pip equivalent to?

Correct Answer:
0.0001

Your Answer:
0.00001

INCORRECT

Has someone shifted the goal post? I thought if a currency is value is five decimal places then the pip value is the same.

(Very Important: There are brokers that quote currency pairs beyond the standard “4 and 2” decimal places to “5 and 3” decimal places. They are quoting FRACTIONAL PIPS, also called “pipettes.” For instance, if GBP/USD moves from 1.51542 to 1.51543, that .00001 USD move higher is ONE PIPETTE.)

Please help

You seem to have answered your own question. But, evidently there is still some confusion.

If you understand 4-decimal-place price quotes – example: 1.2345 – then you know that the last decimal place (where the 5 sits) represents 5 pips. The last two decimal places (where the 4 and the 5 sit) represent 45 pips. Etc.

Overall, the price (1.2345) can be interpreted as 12,345 pips.

If a 5th decimal place appears, it represents 1/10 of a pip. So, if the price is quoted as 1.23456, then the 6 represents 6/10 of a pip, the 5 represents 5 pips, and so forth as before.

In this case, the price (let’s say, 1.23456) could be interpreted as 12,345.6 pips.

Since a decimal point already exists between the 1 and the 2, another decimal point can’t be placed between the 5 and the 6. But, we all understand that the last 2 decimal places represent 5.6 pips (not 56 pips).

The fraction of a pip (1/10 of a pip) is sometimes referred to as a pipette.

If your trading platform quotes prices in 5 decimal places (as most do), be careful to distinguish between pips and pipettes. If your platform reports your profit (in pips) as 135, for example, make sure you know whether that means 135 pips, or 13.5 pips.

Many members of this forum have reported confusion reading P/L figures in MT4 platforms. In most cases, they are not realizing that the last digit represents pipettes (tenths of a pip).

As for “shifting the goal post”, that happened years ago, when most brokers adopted 5-decimal-place price quotes (and 3 decimal-place price quotes for yen-pairs).

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