How to measure Pips in MT4
Do you want to learn more about MT4?
If you do then you’re definitely in the right place.
After numerous requests, we’ve decided to write a couple of articles on how to use the MT4 Platform.
In this part, we will focus on how to measure Pips in MT4.
If you guys would like to see more articles like this leave us a comment at the end.
So if there are things you’re struggling with in MT4 let us know. We would love to write an article about that to help you out.
Now, let us dive right into today’s article and see exactly how to measure Pips in MT4.
If you don’t know what a Pip is don’t worry.
We’ll start with a brief explanation of what Pips are to provide some context.
If you already know what a pip is feel free to skip to the next section using the links below.
Below is a list of the topics we’ll discuss:
What are Pips and why are they important?
So, this first section are for those who don’t already know what Pips are.
The term PIP stands for ‘Point in Percentage‘.
They measure the changes in the exchange rates between currencies.
The exchange rate is usually quoted in 5 decimals on typical currency pairs.
So if we have a single digit move in the 4th decimal place that is considered a Pip.
And a single digit move in the 5th decimal place is considered a Point.
However, you’ll notice below that the Yen pairs are quoted in 3 decimal places.
Thus, for Yen pairs a Pip is a single digit move of the 2nd decimal place.
So, why is this important to know?
Firstly, we’ll use this information when we see how to measure Pips.
Secondly, the value for every Pip movement depends on the Lot Size we decide to trade with.
Our Lot Size means every 1 Pip movement might be worth $1 or $10 each.
Thus, knowing this helps us in our risk management.
First step to measure Pips: find and select your Crosshair Tool
So, first we’ll need to find the pip measurement tool that we’ll be using.
This tool in MT4 is called the ‘Crosshair‘.
To find the Crosshair tool we need to look for the ‘Line Studies Toolbar‘ as seen below.
If you cannot find your Line Studies Toolbar on your platform it might be temporarily hidden.
If that’s the case, go to your ‘View‘ tab on your main navigation bar on the top left of your screen.
After opening the ‘View‘ tab look for the ‘Toolbars‘ option and hover your mouse over that.
Take a look at the illustration below for an example.
Make sure that the ‘Line Studies‘ option is checked.
If it’s not, simply select it and the Line Studies Toolbar should now be visible.
After locating the Line Studies Toolbar, find the ‘Crosshair‘ tool as seen in the example below.
Whenever you want to select the Crosshair tool simply click on this button…
Select the Crosshair icon and move your mouse over to your chart…
After this you’ll notice that there are two Crosshair lines (horizontal and vertical) now displaying on your chart.
After doing this you should see a Crosshair on your chart that looks like the example below.
Now try to move your mouse around on your chart.
You’ll also notice the Crosshair moves wherever you move your mouse.
You will see that the Crosshair horizontal and vertical lines move as you move your mouse around the chart.
So, what exactly does these lines do?
The horizontal line of the Crosshair tool shows you the price level.
The vertical line of the Crosshair shows you the time and date.
If you accidentally press the mouse button the Crosshair will disappear.
However, if this happens simply select the Crosshair again.
Select the candle or range of candles you want to measure
The first thing we need to do is find a candle we want to measure.
You can also measure the Pips for a whole range of candles if you want.
For the purpose of this example we have selected the bearish candle in the below image to measure.
After you have selected a candle to measure we need to move our Crosshair into the right place.
Make sure the horizontal line of the Crosshair tool is at the top or bottom of the candle that you would like to measure.
You can measure from the top or the bottom or a candle. It should look something like the example below.
Notice in the example that we placed the horizontal line right at the high of the candle.
You’ll also notice that the Vertical line is not directly on the candle we want to measure.
The vertical line is not really a factor when we measure Pips.
The only time you’ll use the Vertical line is to check the date and time of a specific candle.
Click and drag the Crosshair Tool
Now, click and drag the Crosshair tool to either the Low or the High of the candle you want to measure.
In our example below, we are measuring from the top to the bottom of the candle.
However, you can do it from the bottom to the top if you prefer.
Also, make sure to keep your mouse button pressed or clicked the whole time.
The moment you release your mouse button the Crosshair tool will disappear.
BUT don’t worry. If that happens simply select the Crosshair tool again and start over.
As you click and drag the Crosshair you’ll notice a bunch of digits.
So how do we calculate Pips from these numbers?
Read and Interpret the values on the Crosshair Tool
You’ll notice that the Crosshair tool gives you three values as seen in the example below.
The first value on the Crosshair in this example is 2. This represents the amount of candles from the starting point of the Crosshair to the end point.
So, if we measured across 5 candles this value would be 5.
The second value is the one that we are looking for. This shows us the distance we have measured in Pips.
It’s important to note that this number is given to us in Points and not in Pips.
BUT, this is only the case when we are dealing with typical currency pairs.
For all Yen (JPY) pairs this will be different.
You’ll remember we learnt above that JPY pairs are quoted in 3 decimal not in 5. Thus, the Crosshair tool shows Pips and not Points in all JPY pairs.
In the example above we were using the EURUSD chart and the value we had was 812.
This means you need to divide this amount by 10 in order to get the distance in Pips.
Thus, in the example above, the candle we measured moved a total of 812 POINTS or 8.12 Pips.
The third value shows you the price level of where the Crosshair tool is at that moment.
Thus, as you drag the Crosshair this value will change as you move up and down the price scale.
So, what did we learn in this article?
We learnt how to find and open our Crosshair Tool within our MT4 platform.
Then, we saw how to drag our Crosshair to measure a candle or range of candles.
We also learnt how to interpret the values on the Crosshair Tool.
Don’t worry if you struggle with the steps in the beginning. Practice makes perfect so keep trying.
After a couple of attempts it will become very easy to do.
Our team is busy developing a very comprehensive online MT4 Video training course. Be sure to inquire from our team when this exciting course will be launched.
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