Spread Question

Beginner Questions
1

Helo all,

I have a quick question, I understand the difference between pips and pipettes, I just wanted to confirm something.

Say your broker, quotes for instance GBP/USD 1.62371/1.62380

0.00001 would be a pipette, so would the spread be in this circumstance 9 pipettes?

I would assume this is a really tight spread if its less than 1 pip?

I’m just a bit confused by it.

Thanks in advance.

2

Yep, exactly right.

3

Yeah seems logically never really looked into it though, I would just quote it as 0.9 pips.

4

Yes…

Yes, and probably unrealistic for a retail account. What broker gave you these quotes?

5

I used to see quotes as an example like 1.62444/1.62459

I used to think this was a 15 pip spread, which I thought was excessive, but now I can see its actually quite good, if it’s only 1.5 pips.

6

1.5 pips is more common and realistic for retail…

7

Just be careful as most brokers have variable spreads which means in times of poor liquidity, the spread can be 15 pips vs lets say 2 pips when liquidity is good. News events tend to create poor liquidity as do weekends, public holidays…

8

Another quick question,

For a currency pair such as GBP/JPY lets say the quote was 136.660 this goes out to 3 decimal places. Would the last place, be a pipette also, or a pip in this instance?

9

pipette again

10

Thanks, Thought it was, so basically my broker adds a pipette to everything.

11

Well, is it a pipette? I don’t trade this pair, but for eurusd a pip was 0.0001 from the days that brokers worked with four digits. Now brokers are or are going to trade 5 digits, and that last digit is called a pipette. But is GBP/JPY normally traded with two or three digits? It may be a pip when it is normally a three digit pair.

I was curious and looked it up. JPY is traded with two digits, so the third digit is indeed a pipette.

Just wanted to be sure…:slight_smile: