A fractional pip, also called a pipette, represents one-tenth of a standard pip and provides more precise price quotes in forex trading. While a standard pip is the fourth decimal place for most currency pairs (0.0001) or the second decimal for Japanese yen pairs (0.01), a fractional pip adds one additional decimal place—the fifth for major pairs and the third for yen pairs.
A fractional pip—or pipette—is one-tenth of a standard pip, adding an extra decimal place for greater pricing precision in forex trading.
This extra precision emerged as electronic trading platforms evolved, allowing brokers to offer tighter spreads and more accurate pricing. For example, if EUR/USD moves from 1.10500 to 1.10501, that's a one-fractional-pip movement.
Think of it like measuring distance: if a pip is a millimeter, a fractional pip is one-tenth of a millimeter, enabling traders to see and act on smaller price changes. Understanding how fractional pips work is essential since they reflect the exchange rate between the base and quote currency in a trading pair.
In short: A fractional pip is one-tenth of a standard pip, adding an extra decimal place for more precise forex price quotes and tighter spreads.
Example in Action
If you buy USD/ZAR at 18.50000 and sell at 18.50015, you've gained 1.5 pips, which equals 15 fractional pips (or pipettes).
South African rand pairs are quoted to five decimal places, so each pipette represents a 0.00001 move in price. This precision allows you to capture tiny price movements that would be invisible with traditional pip counting.
Many brokers display USD/ZAR rates like 18.50347 to help you spot these micro-opportunities for quick scalping profits. The USD/ZAR currency pair is actively traded in foreign exchange markets, where the exchange rate fluctuates based on economic conditions in both the United States and South Africa.
Why It Matters
Fractional pips matter because they expose price movements most African traders never knew existed.
Fractional pips reveal hidden price movements that transform how African traders spot real profit opportunities in the market.
That 0.1 pip difference? It's real money when you're trading multiple positions.
Brokers in South Africa, Kenya, and Nigeria now offer tighter spreads using pipettes—1.5 pips instead of 2 pips on EUR/USD.
For scalpers and day traders dealing with volatile pairs, these tiny measurements reveal profit opportunities hidden in standard pip pricing.
Understanding the bid and ask prices becomes even more critical when working with fractional pips, as pipettes amplify the impact of spread costs on your overall trade profitability.
Common Questions
Do African Forex Brokers Always Display Pipettes on Their Platforms?
Not always. Most established African Forex brokers display pipettes via five-decimal pricing on MT4, MT5, or cTrader platforms, especially for major pairs. However, smaller or regional brokers may omit pipettes, defaulting to four-decimal quotes for simplicity.
How Do Pipettes Affect Spreads Charged by Brokers in Nigeria and Kenya?
Pipettes enable Nigerian and Kenyan brokers to quote tighter spreads below whole pips, reducing transaction costs for traders. This fractional pricing increases competition, benefits scalpers, and allows more precise spread comparisons across local broker platforms.
Can Pipette Pricing Increase Trading Costs for Small Accounts in African Markets?
Yes, pipette pricing can increase costs for small African accounts when brokers offset tight fractional spreads with higher commissions or minimum fees, disproportionately impacting low-balance traders common across Nigeria, Kenya, and other African markets.
Do Currency Pairs Involving the South African Rand Use Pipette Pricing?
Most brokers offering USD/ZAR and other rand pairs do display pipette pricing (five decimals), though it's less emphasized than major pairs. South African traders should verify their platform's pricing format, as spreads remain relatively wide regardless of decimal precision shown.
Which African-Regulated Brokers Offer the Tightest Pipette-Level Spreads?
Exness, Tickmill, and FP Markets deliver the tightest pipette-level spreads for African traders, with FSCA regulation ensuring oversight. Exness offers raw spreads from 0.2 pips, while Tickmill and FP Markets provide ECN access starting at 0.0 pips.
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