My friends have are always talking about their "grade" in piano skill. How do you figure out what your grade is and what is it?

They are probably talking about the "red book."
A typical 5th grader in school could probably be a 1st grader ing the "red book" series.
What you do is get the books from others, they will probably have them, and sight read for your level. As soon as you have trouble, that is the grade you are, that grade of book minus 1 number. Kindergarten is excepted, if you can't get 1st grade you're a first grader.

In Canada we have RCM (Royal conservatory of music) grade books and exams. Could it be that?

I took piano lessons for five years and I have no idea what grades are- wow, you learn something new everyday.

they could be the ABRSM grades, you take an exam with a certain peieces and scales and such then you get a grade certificate

As a kid the lesson books I had were "graded" 1 through 6. If I recall Grade 6 was the heavy duty full originals of Chopin, Beethoven, Liszt...There were some "dumbed down" books of some of the great composers, I remember having a "grade 4" (I think) DeBussy book, and often remember some of the simplified passages when I attempt (very loosely) to read some of the real stuff now.

Hi Oslo. I would agree that they are probably referring to their ABRSM grade, whereby you can apply to take music exams for particular grades. This isn't always the be-all and end-all however, because some people just move from grade to grade without picking up experience and some have a far higher ability than their actual grade. Hope this helps
Rosy