What Are New and Old Pips

On various forex trading forums there is a lot of specific jargon that is not always clear to a beginner. Old and new pips are often mentioned. So what is this about?

Old pips denote the minimum price change at 4-digit brokers, new pips the minimum price change at 5-digit brokers.
Hence the question: what are 4-digit and 5-digit brokers :) ? It is very simple. Different brokers use different quoting systems. With a 4-digit broker, EURUSD quotes are shown as EURUSD 1.3367. And with a 5-digit broker, the same quote will look like EURUSD 1.33670. From school mathematics we know that 0.01=0.010=0.0100=0.01000 . Therefore the values of both quotes are the same:

1.3367=1.33670

Thus:

1 old pip (4 digits)= 0.0001

1 new pip (5 digits)=0.00001

On forums, in various courses, books, monitoring services, etc., it is customary to indicate everything in old pips (4 digits) to avoid confusion and misunderstanding.

In all more or less new expert advisors, the settings do not require any changes to work with 5-digit brokers, you specify the values in the settings (related to pips, for example stop-loss and take-profit) in old pips, and the expert advisor automatically recognizes what quote type your broker has and adjusts its work. In some old expert advisors, to work with brokers with a 5-digit quoting system, you need to add 0 to all parameters specified in pips. But, I repeat, in all new expert advisors you do not need to add any zeros, the automation will do everything for you.

For yen pairs, as you can easily guess, old pips are calculated using 2 digits after the decimal point. Not 3.

For example

Buy at 103.450 , sell at 103.900 .

In this trade, 450 new pips, or 45 old pips, were earned.