If you don’t want to answer my question just don’t comment. Other people are taking the time to help me and I appreciate it.
Don’t come here trying to stop a perfectly normal conversation
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And I really appreciate you taking the time trying to help me
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Sorry, please excuse me. You’re right. No criticism of you was intended, I was just very puzzled, and probably misunderstood. I’ll leave you to it, good luck. 
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I really love the question.
Think of it like like Bitcoin and Satoshi. You can own 0.00001 Bitcoin because Bitcoin relative to cash is nearly 100k and the existence of decimalization allows someone to pay below $1 for anything. This was the genius of 0. There is a whole history on zero’s introduction to European commerce.
Your bank however is unwilling to allow you to fractionalize your Dollar amounts below 1.00 (2 decimal places). In the currency exchange world where a one lot trade is equivalent to $100k then a small change in the value of one currency to the next can carry significant value. So it became essential to add 2 to 3 more decimal places to capture this value change.
That’s all it is. In FX of course the minimum change that overcomes spread cost is to the 4th decimal place (a pip) or to the 5th decimal place (pipette) in a zero spread environment. Hope this added clarity.
PS: If one day we can pay 0.001c for an item then I will assume central banking ended and interest on all money was abolished. (This is what Bitcoin thought it was about till JP Morgan sneezed Lol!)
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But with bitcoin there is really no complication because the system actually pays in fractions. With the money used in FX there is no fractions, you can’t physically hold it.
So I was very surprised to see nowhere really going to detail about why four decimals is happening and why it’s possible.
To me that’s the first thing I need to know as a beginner because we spend our whole life with money in two decimal places.
So does the banking system. It’s just from an accounting point of view we don’t have any good that is valued under 1c. Like I said, if interest rates disappear and currency becomes finite, then it will become necessary to add a 4th decimal place as the current inflated value of goods (inflation) will plummet. So a sweet that use to cost 10c will now cost 0.001c for example to reflect the finite amount of Dollars now in circulation. This won’t happen of course because new money is constantly being created and the Dollar will keep losing value over time.
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The explanation of pipettes making sense for tighter spreads and more precise pricing is clear. It makes me wonder, from a retail trader’s perspective, how much practical impact does that fifth decimal place (or third for JPY pairs) really have on individual trade outcomes, especially for swing or position traders, compared to, say, scalpers?
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Just picture a clock where the seconds or milliseconds are not visible. A clock displays 2:00 and switches to 2:01; there must be an element that accounts for that one minute in order for it to change to 2:01, which consists of 60 seconds. Additionally, there has to be something that explains the transition from 1 second to the next, which involves milliseconds.
You are making trades in the intervals of seconds and milliseconds just before the time reaches 2:01
If the EUR/USD pair displays 2.00 and then rises to 2.01, there is a element responsible for that shift, which will be measured in pips and pipettes and that’s where trading occurs
“there is a element responsible for that shift”
So why don’t stocks go to four decimals??
“So a sweet that use to cost 10c will now cost 0.001c for example to reflect the finite amount of Dollars now in circulation” I’m pretty sure 10c would just buy more sweets we wouldn’t have 0.001c. Did they have 0.001c on the gold standard??
Just to be clear I’m arguing against what your saying. My brain is just confused
“there is a element responsible for that shift”
So why don’t stocks go to four decimals??
“So a sweet that use to cost 10c will now cost 0.001c for example to reflect the finite amount of Dollars now in circulation” I’m pretty sure 10c would just buy more sweets we wouldn’t have 0.001c. Did they have 0.001c on the gold standard??
Just to be clear I’m not arguing against what your saying. My brain is just confused
I don’t see it covered in other comment but your not buying the underlying currency, your buying a contract with your forex broker. Nobody can buy currency to four decimal places but your can trade it with a contract. School of Pipsology Preschool explains this and how it works.
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