With 5 decimal pricing, also known as 5 digit or fractional pricing, brokers quote Forex spreads in tenths of a pip. The additional digit representing a tenth of a pip appears to the right of the quote.
Example
Price before fractional pricing
Price after fractional pricing
1.2510 / 1.2513
1.2510 2 / 1.2512 5
How it can work for you
With fractional pricing, you'll get consistently tighter bid / ask spreads. For example, if you were you quoted a buy price of 1.2513, you could see 1.25125 instead (0.5 pips tighter). If you were quoted a sell price of 1.2510, you could now see 1.25102 instead (2 pips higher).
Before
When the price is...
The spread is...
1.2510 / 1.2513
3 pips
After
When the price is...
The spread is...
1.2510 2 / 1.2512 5
2.3 pips
Tighter spreads make it easier for you to turn a profit from liquid currency pairs with small pricing changes. They can also facilitate scalping strategies where you look to profit from small incremental movements in prices.
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Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 66-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Disclaimer: ForexBrokersAZ.com does not accept deposits, advise on investments, deal in investments (as agent or principal) or arrange deals in investments. Information published on this website and in our external communications is factual and for information purposes only. It does not constitute financial advice under the Financial Services and Markets Act 2000. ForexBrokersAZ.com is owned by Hades Capital Limited, a company registered in England under number 08176698. Our registered address is: Union House, 111 New Union Street, Coventry, England, CV1 2NT.
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