I’ve been doing some independent research into the currency market, and have a general question regarding decimal places in pair values. We’re accustomed to pair values at four decimal places for all major pairs, excepting the JPY pairs, which are quoted at two decimal places. However, in conducting research into more exotic pairs, there appears to be a gray zone where perhaps three decimal places are used.
Is this the case? Do we quote at three decimal places ever? If so, where are the break points at which we move from four decimals to three, then three to two? If not, where is the break zone from which we move from four decimals directly to two? Is there a hard and fast rule for this? I would think so as, even though these pairs are quit exotic, people must be trading them.
Thanks so much in advance for assistance. I can give examples if that will help to clarify my question.
Really? Nobody? No one has an idea about this? I didn’t think it would be that much of a stumper for those immersed in the forex market. Any idea where I can go to get this answered?
I think this mostly depends on the volatility of the pair involved or the average pip movements of the currencies in that pair. For the currency crosses that still include the non-yen majors, it seems that they’re at 4 decimal places. How exotic are these pairs you’re looking at?
Keep it simple Steve!
Pip position is determined by Quote(term) currency.
For:the pairs with quote ccy in:
JPY and HUF pip is 0.01 with value of 1000 quote ccy per every 100 000 of base traded.
CZK, RUB- pips is 0.001 with value of 100 quote ccy per every 100 000 of base traded.
The rest of the most traded pairs: 0.0001 with value of 10 quote ccy per every 100 000 of base traded.
You may find my post @ How much is Mr. Pip worth? interesting. If you do share your opinion and good word. #Keepitsimple
I had practically given up on receiving a response! Thanks so much. I have attempted to look at movement, ie how many pips the movement would be if it were at two, three or four decimal places. I had a framework settled upon – well, nearly settled upon. Then I began to chart in more detail, and it didn’t seem to be consistent: movements either too big or too small.
At the moment I am looking at the Americas, and the best examples are these: honduran lempira vs costa rican colon (hnl/crc) which over the years has floated between 19 and 29; the nicaraguan cordoba vs the c r colon (nio/crc) which has fluctuated between 19 & 30; the mexican peso vs c r colon (mxn/crc) which has been between 36 & 47
It seems that somewhere in the high teens into the 40’s there is a break zone where pairs are quoted at either four places … or three … or perhaps two. I thought perhaps there are traders who know where these break points are, and would be super grateful if someone does.
Thanks so much! I’m going to read your post and get back to you. In the meantime:
I am looking primarily at raw numbers, ie pair values. Many pair values are obviously quoted/traded at four decimal places, others eg jpy are quoted/traded at two decimal places. Some brokers are moving to quote a further point beyond this. Regardless, let me give some examples using today’s numbers and those currencies you mentioned:
SEK/HUF from yesterday to today: [32.7936 to 32.6720] or [32.794 to 32.672] or [32.79 to 32.67]? The answer will determine whether this is a drop of 1216 pts or 122 pts or 12 pts. The former seems too high, but perhaps this is a volatile pair.
USD/CZK from yesterday to today: [24.3207 to 24.4330] or [24.321 to 24.433] or [24.32 to 24.43]? Is this an increase of 1123 pts or 112 pts or 11 pts?
TRY/RUB from yesterday to today: [21.4551 to 21.7829] or [21.455 to 21.783] or [21.45 to 21.78]? Is this an increase of 3278 pts or 328 pts or 33 pts?
Is there a hard and fast rule? Does it vary by broker?
I am not sure if there is a specific system, but I have also seen some use 5 decimal places as well. But not sure if this matters in your quest for why some use certain place numbers.
The 3rd/5th number isn’t a pip, its a pipette 1/10th of a pip.
Which broker do you use, it may be that by not quoting in pipettes they are making a wider spread than you realise, I.e. by offering you 1.2035 instead of 1.20359 when you sell they are pocketing the extra 9 pipettes you cannot see.
[QUOTE=“eddieb;713557”]The 3rd/5th number isn’t a pip, its a pipette 1/10th of a pip. Which broker do you use, it may be that by not quoting in pipettes they are making a wider spread than you realise, I.e. by offering you 1.2035 instead of 1.20359 when you sell they are pocketing the extra 9 pipettes you cannot see.[/QUOTE]
I use fxpro for my live account and they do quote the 3rd and 5th decimal point which is a pipette as you say. Their spread quotes are then shown as 1.9, 2.1, 1.7 etc as it changes so I think you’re right it gives you a clear picture of the spread.
