You will often come across the terms Pip and Point in forex. Let us clarify the relationship between these terms and their usage in Exness.
By definition, a Point is the basic unit of measurement of price differences, while a Pip is the minimum amount of price change.
- The difference between 1.23234 and 1.23244 is 1 Point.
- The difference between 1.23234 and 1.23237 is 3 Pips.
Pip vs Point
The formula used to define the relationship between these two terms is:
1 Point = 10 Pips
Thus a Pip is 1/10th of a Point.
A Point Size is a number that indicates the placement of the Point in a price. For most currency pairs it is a standard value of 0.0001.
For example, Point Size for EURUSD is 0.0001. This means that if we look at the price of EURUSD at any given point in time, the 4th place after the decimal point is the Point. Thus the Pip is the 5th place.
There are currency pairs which have a Point Size of 0.01, for example XAUUSD. This means that for XAUUSD, the Point is the second digit after the decimal point, and Pip the third.
This article would be incomplete without pointing out any existing exceptions to this relationship we have established between the terms Point and Pip.
Thus, please note that MetaTrader uses both terms Point and Pip as synonyms, interchangeably, to refer to Pip. Thus when setting trailing stops or checking spread, if you see ‘Points’, know it actually means Pips.