How to Calculate Stop Loss in Pips

A subtraction and a decimal point

Every stop is two prices: the one you enter at, and the one where the trade is closed. The distance between them in pips is what every other sum in trading arithmetic needs — a pip being the fourth decimal place of the price, the smallest step most people count in. The sum is a subtraction and a shift of the decimal point. Entry 1.15872, stop 1.15672: the difference is 0.00200. Read it to four places and it is 20 pips. The fifth digit, when there is one, is a tenth of a pip, and it is read as a decimal: 0.00205 is 20.5 pips.

Where the decimal goes

The subtraction is the same on every symbol; the place the pip sits is not. On the euro and the pound against the dollar it is the fourth decimal, so 0.00200 is 20 pips. On gold, quoted in dollars per ounce to two decimals, most brokers call ten cents a pip, so a difference of 12.00 is 120 pips. On an index like the Nasdaq the step people count in is one point, so a difference of 80.00 is 80 points. The symbol's specification page says where the pip sits; read it once and the decimal always lands in the right place.

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