Day 2 — The language of price: base/quote, bid/ask, points, pips, and ticks

PRICE LANGUAGE

The screen shows 1.08526—but what does each digit mean?

A price is more than a moving number. It tells you what is being priced, which side of the quote your order uses, how finely the platform displays it, and which contract rules turn a price move into money. This lesson separates those ideas so you do not treat pips, points, and ticks as interchangeable.

BASE / QUOTE

Read the pair from left to right

EURUSD = 1.08526

EUR is the base currency. USD is the quote currency. One euro is priced at 1.08526 US dollars.

USDJPY = 154.200

USD is the base currency. JPY is the quote currency. One US dollar is priced at 154.200 yen.

When the quote currency is not your account currency, the platform may need another conversion before profit or loss appears in the account currency. Do not assume a JPY result is already a USD result.

BID / ASK / SPREAD

Buying and selling use different sides of the quote

BID

Open Sell · Close Buy

ASK

Open Buy · Close Sell

Spread = Ask − Bid

Many OTC symbols draw charts from Bid by default, but the actual chart mode is a symbol property. A Sell position closes on Ask, which may sit above the visible Bid chart by the spread. This is why a Sell stop can trigger even when the Bid candle appears not to have touched that level. Verify Chart mode in Specification and enable the Ask line when needed.

DIGITS · POINT · PIP · TICK

Four ideas that sound similar but do different jobs

Digits & Point

Digits is the number of displayed decimals. Point is the value of the smallest displayed digit; for example, Digits = 5 gives Point = 0.00001.

Pip & Pipette

Pip is an FX distance convention, commonly the fourth decimal for most pairs and the second for JPY pairs. One additional fractional digit is commonly called a pipette.

Tick Size

The actual tradable price step. It may equal one Point or span several Points; read it from Specification.

Tick Value

The monetary value of one tick under the contract specification. It must be considered together with Volume and the calculation currency.

Do not assume that one pip always equals the same number of points. Pip is primarily an FX quoting convention. For gold, indices, futures/CFDs, and crypto, use the price unit and Tick Size stated by the contract or provider. A broker may use the word “pip” informally, but that does not establish monetary value.

REFERENCE TABLE

Which values are conventions—and which must be checked?

Term	What it measures	Unit	Where to verify
Base currency	The first currency—the one unit being priced.	Currency unit	FX quote convention
Quote currency	The second currency, showing how much is needed for one unit of the base.	Currency unit	FX quote convention
Bid / Ask	The trader’s sell-side / buy-side quote.	Price	Live provider quote
Spread	The difference Ask − Bid.	Price or points	Varies with quote and provider
Digits	The number of decimal places displayed.	Count	Specification
Point	The value of the smallest displayed price digit.	Price unit	SYMBOL_POINT / Specification
Pip / pipette	An FX distance convention / one tenth of a pip.	FX distance unit	Depends on FX quote format
Tick size / Tick value	Tradable price step / monetary value of one price step.	Price / currency	Contract- and provider-specific

WORKED EXAMPLES

Convert price distance step by step

EURUSD · 5 digits

Assume Point = 0.00001 and the usual 1 pip = 0.0001 convention. Price moves from 1.08526 to 1.08616.

0.00090 ÷ 0.00001 = 90 points
0.00090 ÷ 0.0001 = 9 pips

USDJPY · 3 digits

Assume Point = 0.001 and the usual 1 pip = 0.01 convention. Price moves from 154.200 to 154.285.

0.085 ÷ 0.001 = 85 points
0.085 ÷ 0.01 = 8.5 pips

These examples measure distance only. They do not calculate money. Monetary profit or loss still depends on contract properties, trade volume, and currency conversion.

MT5 SYMBOL SPECIFICATION

Read the actual contract before using any unit

In Market Watch, right-click a symbol and choose Specification. The screenshot below is a real XAUUSDc example supplied for this lesson. It is evidence of one provider/account configuration at the capture time—not a universal XAUUSD standard.

Open Specification from the MetaTrader 5 Market Watch context menu — Right-click the symbol in Market Watch, then choose Specification.

Upper section of the MetaTrader 5 Specification window for XAUUSDc — The upper section shows price precision, contract, calculation, execution, and minimum-volume properties.

Lower section of the MetaTrader 5 Specification window for XAUUSDc — The lower section shows volume limits and steps, swap settings, and quoting/trading sessions.

Digits = 3, so the displayed Point is 0.001.

Spread is marked floating, so it can change with market conditions.

Profit currency is USD and Chart mode is By bid price.

Contract size shows 1 XAU. Use that provider label as shown; do not convert it to ounces without the provider’s documentation.

Tick Size and Tick Value are still not visible in these captured sections; continue scrolling before calculating monetary value.

Minimal volume = 0.01 states the minimum order size, not the risk of 0.01 lot.

Maximal volume = 200 and Volume step = 0.01 are order constraints, not a recommendation to use the maximum size.

Swap type is In points; this snapshot shows Swap long = -567.4 and Swap short = 0 only for this specification at the capture time.

The Swap rates table shows Wednesday = 3, but always recheck the triple-swap day because provider terms can change.

Quotes and Trade have separate Sessions columns. Scroll to read each full daily schedule; do not infer times hidden by an ellipsis.

XAUUSD · US30 · BTCUSD

Do not import a fixed contract value from another provider

XAUUSD

Check Digits, Point, Tick Size, Tick Value, Contract Size, Profit Currency, and Calculation mode in the live account. The symbol name alone does not establish ounces per lot.

US30

The name may reference the same index, while multiplier, price-step value, trading sessions, and minimum volume differ.

BTCUSD

Verify the instrument type, Contract Size, Profit Currency, trading sessions, and overnight financing terms.

MONEY VALUE

The same number of points can produce different money

Price distance is only one input. Contract Size defines exposure, Tick Size defines the tradable step, Tick Value connects that step to money, Volume scales the position, and currency conversion maps the result into the account currency.

Number of ticks = Price distance ÷ Tick Size
Estimated money move = Number of ticks × Tick Value × Volume

Use the platform’s current profit calculator or order preview where available; the simple formula may need currency conversion and provider-specific calculation rules.

BEFORE YOU TRADE

Specification checklist

Digits & Point
Tick Size & Tick Value
Contract Size
Profit & Margin Currency
Spread & Chart Mode
Stops Level
Minimum Volume & Volume Step
Calculation & Execution Mode
Trading Sessions
Swap / Financing

COMMON ERRORS

Mistakes that distort risk calculations

Calling points “pips” without checking Digits and the pair’s quote convention.
Using the word pip for gold, indices, or crypto and inferring money from the label.
Watching only the Bid chart and forgetting that a Sell closes on Ask.
Assuming the same symbol name has the same Contract Size everywhere.
Converting price distance directly into money without Tick Value, Volume, and account currency.

HANDS-ON PRACTICE

Open Market Watch and verify the values yourself

1Open EURUSD in Market Watch and record its live Bid, Ask, Spread, Digits, and Point.View answer

Answer: Verify Spread = Ask − Bid in the same price unit. Use Digits to derive Point = 10 to the power of −Digits, then compare with Specification instead of copying this lesson’s example.

2Open USDJPY and express a 0.085 price move in points and pips.View answer

Answer: If Specification shows Digits = 3, Point = 0.001: 0.085 ÷ 0.001 = 85 points. Under the usual JPY-pair convention where 1 pip = 0.01, that is 8.5 pips. Always state the assumption.

3Open XAUUSD Specification and record Digits, Point, Tick Size, Tick Value, Contract Size, and Profit Currency.View answer

Answer: The correct answer is the value shown in your own account at the time of inspection, not a universal number. Scroll in Specification if Tick Size or Tick Value is not yet visible.

4Compare US30 across two providers or account types and identify which specifications differ.View answer

Answer: Compare at least Digits, Tick Size, Tick Value, Contract Size, Profit Currency, trading sessions, and minimum volume. An identical symbol name does not guarantee an identical contract.

5Open BTCUSD and explain why “a 100-point move” is not enough to state monetary profit or loss.View answer

Answer: You still need Tick Size, Tick Value, Contract Size, Volume, Profit Currency, and account-currency conversion. The same displayed distance can therefore produce a different monetary result.

KNOWLEDGE CHECK

Three questions with explanations

1. EURUSD shows Bid 1.08524 and Ask 1.08526. If a Buy is opened and immediately closed with no quote change, which prices are used?

A) Open at Bid and close at Ask
B) Open at Ask and close at Bid
C) Open and close at Last

Open explanation

It opens at Ask 1.08526 and closes at Bid 1.08524, so the 0.00002 spread is incurred before any other fees.

2. If Digits = 5 and price moves 0.00090, what is the distance under the usual non-JPY FX convention?

A) 9 points and 90 pips
B) 90 points and 9 pips
C) 900 points and 0.9 pip

Open explanation

90 points and 9 pips. Point = 0.00001 and the stated convention uses 1 pip = 0.0001, so one pip equals 10 points in this example.

3. Which information is required before calculating the monetary value of an XAUUSD move?

A) Digits alone
B) The symbol name alone
C) Tick Size, Tick Value, Contract Size, Volume, and the relevant currencies

Open explanation

The last option. Point describes display precision; it does not by itself determine the complete monetary value of a move.

SUMMARY

Five ideas to keep

1Base is what is being priced; Quote is the unit used to express that price.
2Buy opens at Ask and closes at Bid; Sell opens at Bid and closes at Ask; Spread is the difference.
3Digits and Point describe display precision; pip is an FX quote convention.
4Tick Size and Tick Value are contract properties and need not equal Point or pip.
5Before calculating money, open the live account’s Specification and include Contract Size, Volume, and currencies.

For education only—not investment advice or a trading signal. Leveraged products can produce rapid losses. Verify the current contract terms in your own platform and practise on a demo account before risking real money.

VERIFIED OFFICIAL SOURCES

Sources checked for this lesson

References are collected here so the lesson stays readable without citation numbers after every paragraph.

Complete the exercise and review the answers before marking this lesson complete.