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Most brokers now offer fractional pip pricing. These smaller increments are called pipettes. One pipette equals one-tenth of a standard pip. Understanding pipettes is important because they affect how you calculate profits and losses, especially for scalpers and day traders.
A standard pip on EUR/USD is 0.0001. A pipette is 0.00001 – the fifth decimal place. When you see EUR/USD quoted as 1.10005, the last digit (5) is a pipette. Five pipettes equal half a pip (0.00005).
For yen pairs, a standard pip is 0.01. A pipette on USD/JPY is 0.001 – the third decimal place. USD/JPY quoted as 148.503 means 148 yen, 50 standard pips, and 3 pipettes.
Pipettes allow for tighter spreads and more precise pricing. In the past, the minimum spread on EUR/USD was 1-2 pips (0.0001 to 0.0002). With pipettes, brokers can offer spreads as low as 0.1 pips (0.00001) – a huge improvement for traders.
Pipettes also reduce the impact of spread costs. A 1-pip spread costs $10 per standard lot. A 0.1-pipette spread costs only $1 per standard lot. Scalpers especially benefit from fractional pricing.
When you see a broker advertising "zero spreads" or "raw spreads from 0.0," they are quoting in pipettes. A spread of 0.0 actually means 0.0 pipettes – extremely tight but rarely zero.
For profit calculation, pipettes add precision. If you make 12.5 pips on a trade, that means 125 pipettes. Your profit is calculated exactly based on that fractional amount.
You buy EUR/USD at 1.10000 and sell at 1.10085. The difference is 0.00085, which equals 8.5 pips (85 pipettes).
With 1 standard lot: 8.5 pips × $10 per pip = $85 profit.
If you only tracked whole pips, you might think you made 8 pips ($80) or 9 pips ($90). Pipettes give you the exact $85.
For most traders, no. The 1% rule and position sizing formulas work fine with whole pips. However, scalpers trading very tight stops (under 10 pips) need pipette precision. A 2.3-pip stop loss is different from a 2.0-pip stop loss in terms of position size.
Our pip calculator works with standard pips only, which is sufficient for 99% of retail traders. If you are scalping with sub-5-pip stops, you should use your broker's platform for precise calculations.
Most modern forex brokers use pipette pricing including Oanda, Forex.com, IG, Pepperstone, IC Markets, and many others. You can identify pipette pricing by looking at the quote format:
If you trade daily charts with 50+ pip stops, pipettes are irrelevant. If you trade 5-minute charts with 10-pip stops, pipettes matter slightly. If you scalp 1-minute charts with 3-pip stops, pipettes matter significantly.
For most retail traders, focus on proper risk management and position sizing using whole pips. The precision of pipettes will not make or break your profitability. Consistent execution of the 1% rule matters far more.
Use our pip calculator for accurate position sizing with whole pips. For scalping strategies, practice on a demo account until you understand how pipettes affect your specific broker's execution.
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