The fifth decimal and the misread spread

[Fairman]

The fifth decimal and the misread spread

Most brokers quote prices to five decimals, or three on yen pairs. The last digit is a fraction of a pip, often called a pipette or point.

New traders misread this regularly. A spread of 12 points is 1.2 pips. A deviation setting of 10 means one pip, not ten. A stop loss of 20 in the wrong field becomes two pips instead of twenty.

Scripts and expert advisors add to the confusion. Some parameters are in points, others in pips, and the conversion depends on the number of decimal digits the broker uses.

An EA built for a four-digit broker and run on a five-digit one may place stops ten times closer than intended.

Checking takes a minute: look at the symbol specification, note the digits, and verify what the platform calls a point. Then test with a tiny order and look at where the stop lands.

Has a point-versus-pip mix-up ever produced a stop or a slippage setting that was ten times off?