What you'll learn
- Distinguish a pip from a pipette
- Read a five-decimal price without miscounting
- Understand what typical daily movement looks like
Five-decimal pricing
A quote of 1.10012 has five decimals. The pip is still the fourth decimal, the 1 in 1.1001, and the final 2 is two pipettes. A spread quoted as 1.2 pips is one pip and two pipettes. Platforms sometimes display the pip digits larger than the pipette, which helps, but the safe habit is to ignore the last digit when counting a move and use it only when comparing spreads.
How far pairs move
A major pair typically moves somewhere between 50 and 120 pips from its daily high to its daily low, more on news days and less in quiet summer weeks. The average true range indicator, covered in Course 6, measures this for any pair and timeframe. Knowing the normal range stops you placing a stop loss so close that ordinary noise takes it out, or a target so far that the market rarely reaches it in your holding period.
Price movement in money
A 100-pip day on EUR/USD is a one-cent change in the exchange rate. That sounds trivial, and for a tourist it is. For a trader holding one standard lot it is 1,000 dollars, because leverage lets that trader control 100,000 euros with a few thousand dollars of margin. The small numbers in forex are only small until they are multiplied by position size, which is why the next course spends so long on exactly that multiplication.
Key takeaways
- A pipette is a tenth of a pip: the fifth decimal on most pairs.
- Count moves in pips, not in the last digit shown.
- Majors typically range 50 to 120 pips a day; the ATR measures it precisely.
- Small price changes become large money changes through position size.
Knowledge check
Trading forex, CFDs and other leveraged products carries a high risk of losing money. This lesson is general education, not advice. Risk disclosure.