Market StructureFractional PipPoint
Pipette
One tenth of a pip - the fifth decimal place on most pairs and the third on yen pairs.
What Pipette means
A pipette, also called a fractional pip, is one tenth of a pip. Most brokers now quote five decimal places on standard pairs and three on yen pairs, so the final digit shown is a pipette rather than a pip. Fractional pricing was adopted so that market makers could compete on finer increments, which narrowed effective spreads and allowed quotes such as 0.3 pips that would be impossible in whole pips.
The main source of confusion is terminology. Several platforms use the word point for what is really a pipette, so an input field asking for a stop distance in points may need ten times the number a trader expects in pips. Always confirm the digit convention on the instrument before entering stop and target distances, particularly when moving a strategy between platforms or converting an expert advisor written for a four-decimal feed.
Worked example
EUR/USD quoted 1.08495 / 1.08505 has a spread of one pip, or ten pipettes; entering a stop of 200 points on a five-decimal feed means 20 pips, not 200.
Related terms
- PipThe standard smallest conventional price increment in a currency pair - the fourth decimal place, or the second on yen pairs.
- SpreadThe difference between the bid and the ask price, and the most common way a forex broker is paid.
- TickA single change in the quoted price - in forex any new quote update, and on an exchange the minimum price increment.
- MetaTrader 4 (MT4)The 2005 MetaQuotes retail terminal built around MQL4 expert advisors, hedging accounts and a single-threaded strategy tester.
- Stop LossA resting order that closes an open position once price reaches a set level, capping the loss on that trade.
Frequently asked questions
What does Pipette mean in forex trading?
One tenth of a pip - the fifth decimal place on most pairs and the third on yen pairs.
How does Pipette work in practice?
The main source of confusion is terminology. Several platforms use the word point for what is really a pipette, so an input field asking for a stop distance in points may need ten times the number a trader expects in pips. Always confirm the digit convention on the instrument before entering stop and target distances, particularly when moving a strategy between platforms or converting an expert advisor written for a four-decimal feed.
What is an example of Pipette?
EUR/USD quoted 1.08495 / 1.08505 has a spread of one pip, or ten pipettes; entering a stop of 200 points on a five-decimal feed means 20 pips, not 200.
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