Forex stops and reward targets by quote increment

Lock the pip plan before the ticket

A stop-loss is a pre-set exit price or pip distance that closes a position so a planned loss stays bounded if price moves against the trade. A take-profit is a pre-set exit price or pip distance that closes a favorable move at a planned gain instead of leaving the reward side open. The two are described as a pre-set bound on loss if price moves the wrong way, and a pre-set bound that exits a gain before a reversal.

The risk-reward ratio is the planned stop distance compared with the planned target distance, fixed before entry so exposure is accepted only as a paired, bounded ticket. The conventional unit for those two distances is the pip. The quote increment is the smallest price step a platform displays for a pair, and it converts a pip distance into the actual stop or target price typed on the ticket.

Four-decimal and five-decimal quoting

On a four-decimal platform, yen pairs are quoted to two decimal places and other pairs and crosses are quoted to four. In that convention one pip is 0.01 on a yen quote and 0.0001 on a non-yen quote.

On a five-decimal platform, yen pairs are quoted to three decimal places and other pairs and crosses are quoted to five. Live stop and target fields can then require an extra digit relative to a four-decimal ticket.

The same pip distances on four tickets

A long USD/JPY ticket at 90.25 with a 30-pip stop and a 100-pip target uses a 0.01 pip step, placing the stop at 89.95 and the target at 91.05.

A short AUD/USD ticket at 1.0469 with a 100-pip stop and a 300-pip target uses a 0.0001 pip step, placing the stop at 1.0569 and the target at 1.0169.

A short EUR/JPY ticket at 120.262 with a 50-pip stop and a 150-pip target places the stop at 120.762 and the target at 118.762. EUR/JPY is a currency-cross, a pair that does not use the US dollar as either the first or the second currency.

A long USD/CHF ticket at 0.93726 with a 150-pip stop and a 300-pip target places the stop at 0.92226 and the target at 0.96726.

Modifying a live five-decimal order

After a five-decimal order is live, the same pip distances can require an extra zero in the modify fields, so a 50-pip stop and 150-pip target are entered as 500 and 1500, and a pip-based profit-and-loss readout can scale by ten.

When one platform quotes some pairs to four decimals and others to five, novice traders commonly mis-enter stop and target adjustments.