Pairs and quotes: what 1.0850 means
What you learn in 3 minutesThis lesson shows what the number in a currency quote actually means, and what one small move in that number is worth in rupees. Using USD/INR at about 83.2500 as the example, the reader learns that the last decimal place has a money value, and that the two prices shown side by side are not a mistake but the cost of entering and leaving a trade.
One pip on USD/INR at 83.2500
| Step | Amount | Note |
|---|---|---|
| Instrument | USD/INR | The first currency is the US dollar, the second is the Indian rupee. |
| Quote shown | 83.2500 | This means one US dollar is priced in rupees. |
| Last decimal place | 0.0001 | This is one pip for this pair. |
| One standard lot | 100,000 units | The standard contract size used in this example. |
| Value of one pip | ₹10 | 100,000 multiplied by 0.0001 equals ₹10. |
| Move from 83.2500 to 83.2510 | 10 pips | Ten steps in the last decimal place. |
| Money value of that move | ₹100 | 10 pips multiplied by ₹10 per pip. |
| Bid and ask example | 83.2498 and 83.2502 | The difference is 0.0004, which is 4 pips. On one standard lot that is ₹40. |
The spread varies between brokers and can widen around news or at market open. Some brokers also charge a commission, and the exact pip value can differ slightly if the contract size or the quote precision is different. Always check the contract specification before placing a trade.
The mistake people make here
A common mistake is to read a quote as a single price and ignore the second number. The two numbers are the bid and the ask, and the gap between them is a real cost that is already in the market. If a trade opens and immediately shows a small loss, that is often the spread, not a fault in the platform. The fix is to note both prices before entering, work out the spread in pips, and multiply it by the pip value for the lot size being used.Check yourself
USD/INR moves from 83.2500 to 83.2530. How many pips is that, and what is it worth on one standard lot?
The move is 0.0030, which is 30 pips. On one standard lot, 30 pips multiplied by ₹10 per pip equals ₹300.
A quote shows 83.2495 as the bid and 83.2505 as the ask. What is the spread in pips and in rupees on one standard lot?
The difference is 0.0010, which is 10 pips. On one standard lot, 10 pips multiplied by ₹10 per pip equals ₹100.
If one pip on one standard lot of USD/INR is ₹10, what is one pip worth on 0.10 lots?
0.10 lots is one tenth of a standard lot, so one pip is ₹10 divided by 10, which is ₹1.