Pips, pipettes and the five-digit confusion that distorts risk numbers

[Amanhasnoname]

Most brokers quote prices to five decimals on majors, three on yen pairs. The fifth decimal is a pipette, a tenth of a pip. That's a source of confusion that still catches people.

A spread of 12 on the platform means 1.2 pips, not 12. A stop of 50 in the settings might mean 5 pips. Mixing up the two creates risk that is ten times larger or smaller than planned.

Expert advisors and indicators often inherit this problem. A script written for four-digit brokers needs adjustment on five-digit ones. If stops and targets are defined in points, the numbers don't match what the trader expects.

A simple safeguard is to check, on a demo account, how far a stop of a given size sits from the entry on the chart. If it looks off, something is mis-scaled.

It's an old mistake, but still one of the most common.

Ever been caught by a pip-versus-point error?