I have what may seem a silly question, I have been reading the school section on this site & realised that my mt4 broker (Alpari) trades currencies with 5 decimal places (3 on usd/jpy). Is there any major advantage or disadvantage trading with what I now know as pipettes ??
I am fairly new to forex & after about 12 months trading with alpari - don’t have any real problems, I actually thought I was doing fantastic (600 pips this week) - but these were actually pipettes. I cant see any real difference personally ??
a pipette is considered very small in terms of price movement. 600 pipettes= 60 pips. most traders, i assume, talk in terms of Pips as these are more significant movements.
i cant see any major disadvantage trading with pipettes. just remember to clarify that you are talking about pipettes if you tell people your wins/ losses. 600 pipettes is good, but 600 pips would be fantastic.
5 decimal places gives you more transparency. An example:
if a broker says their spread for GBP/USD is 2 pips, another broker may be at 1.6 pips = 20 pipettes vs 16 pipettes … can make a difference if you are dealing with large amounts of money.
I used to be against the whole pipette thing… they were confusing to me. When I was swing trading I could pretty much get away with ignoring them. Now that I’m looking at shorter timeframe trades, the pipettes seem to be highly relevant. I think after looking at them long enough, they just become the norm. Reminds me of when they got rid of the fractions in the equity markets… it was a big deal for a lot of traders.