A pipette is a fractional unit used to express very small moves in a currency quote. It is essentially one tenth of a pip, and it appears when brokers quote prices to an extra decimal place. For traders this extra digit gives more precision: rather than measuring price movement only in whole pips, you can see and, if you like, measure changes at the tenth-of-a-pip level. This article explains what a pipette is, how it relates to a pip, how to calculate its value, and why it matters in practice.
A quick definition and how it fits with pips
In forex the common unit for measuring price movement is the pip. For most currency pairs a pip is the fourth decimal place (0.0001). For pairs quoted in Japanese yen, a pip is the second decimal place (0.01). A pipette is one tenth of that smallest unit. For a standard EUR/USD quote, a pipette sits in the fifth decimal place; for USD/JPY it sits in the third.
Saying “pipette” simply recognizes that many platforms now show an extra digit for price. When a EUR/USD price moves from 1.10810 to 1.10811, that last digit movement is a single pipette. Ten such pipette moves make one pip.
How pipettes and pips look in examples
To make this concrete, imagine a few everyday quotes you might see on a trading screen. If EUR/USD is quoted as 1.25000, and then it becomes 1.25010, that change of 0.00010 equals one pip. If the broker displays five decimals and the price moves from 1.25003 to 1.25004, that tiny move of 0.00001 is one pipette.
For a yen pair, say USD/JPY at 110.123. If the broker quotes three decimals, a move from 110.123 to 110.124 is one pipette (the pip for yen pairs is two decimals, so a change from 110.12 to 110.13 is one full pip).
These extra digits are often shown in smaller font or superscript on platforms; traders refer to them as fractional pips, pipettes, or points depending on the broker and the platform.
Calculating pipette and pip value step by step
Understanding what a pipette is conceptually is useful, but in trading you usually need to convert price moves into currency value. The basic idea is to multiply the size of the price move (pip or pipette) by the position size, and then convert to your account currency if necessary.
When the quote currency equals your account currency (a common case), the calculation is straightforward: multiply the pip size by the number of base units you hold.
For standard lot sizing the usual relationships are:
- One standard lot = 100,000 units
- One mini lot = 10,000 units
- One micro lot = 1,000 units
For non-JPY pairs (pips at fourth decimal):
- One pip = 0.0001 × lot size
- One pipette = 0.00001 × lot size
Example: EUR/USD, standard lot (100,000 units). One pip = 0.0001 × 100,000 = 10 USD. One pipette = 0.00001 × 100,000 = 1 USD. So a move of 7 pipettes = 7 USD for a standard lot.
For JPY pairs (pips at second decimal):
- One pip = 0.01 × lot size (value in JPY)
- One pipette = 0.001 × lot size (value in JPY)
Example: USD/JPY, standard lot (100,000 units). One pip = 0.01 × 100,000 = 1,000 JPY. If USD/JPY is 110.00, to express that 1,000 JPY in USD you divide by the exchange rate: 1,000 ÷ 110 = about 9.09 USD per pip. One pipette is one tenth of that, roughly 0.909 USD per pipette for a standard lot at the same rate.
If your account currency differs from the quote currency, you must convert the pip (or pipette) value into your account currency using the relevant exchange rate. Many traders rely on the trading platform or a pip-value calculator to do this automatically, but the underlying arithmetic is the same: find the pip-sized change in the quote currency, multiply by the position size, then convert to the account currency.
Why brokers show pipettes and when they matter
Brokers introduced pipettes for two practical reasons: higher pricing precision and improved spread competition. Electronic pricing and deep liquidity allow brokers to quote to five decimals (or three for yen pairs), giving a more granular view of price action and enabling slightly tighter spreads when measured in pipettes rather than pips. For market makers and ECN providers, quoting fractional pips helps them show more competitive prices without changing the underlying market structure.
Pipettes can be particularly relevant for scalpers and high-frequency strategies where very small price changes matter. When you’re targeting 1–5 pips per trade, seeing the extra digit helps refine entry and exit levels and gives a more accurate sense of slippage, spread cost and execution quality.
For longer-term traders, pipettes are less important; most planning, risk-sizing and performance tracking is still done in whole pips or dollar value terms.
Ticks, points and naming conventions
Different markets use different words for the smallest price increment. In forex “pip” and “pipette” are common, but some people also use “point” or “tick.” A tick is a generic term meaning the smallest price change a specific instrument allows; for some instruments a tick may be 0.25 or another value. In forex, “point” is sometimes used interchangeably with pip or pipette depending on the speaker. Because terminology varies, focus on the decimal place and numerical size (for example, “0.0001” or “0.00001”) instead of on naming alone.
Practical considerations for traders
Seeing prices to the pipette level does not change the mechanics of risk management: you still choose position size, set stop-loss and take-profit levels, and calculate potential dollar gains or losses. What does change is precision. A broker quoting five decimals can offer a spread of 0.3 pip which might be shown as 3 pipettes; the same spread with four-decimal pricing would be shown as 0.3 pips or rounded differently. Always read the quote format on your platform so you know whether the last digit is a pipette.
Also be aware that some providers display the extra digit but calculate commission, margin and pip value based on full pips or internal rules. Use the broker’s pip-value tool or test with a demo account to confirm how values and costs show up for your account.
Risks and caveats
Trading any financial market involves risk, and the extra precision of pipettes does not reduce that risk. Smaller quoted increments can give the impression of greater control or easier profits, but actual profit and loss still depend on position size, leverage, spreads, slippage and market volatility. Pipette-level moves are tiny; multiplied by a large position they become meaningful, and multiplied by leverage they can produce large gains or large losses quickly. Execution conditions vary across brokers—spread widening, requotes and slippage are real possibilities, especially during news or low-liquidity periods. This article is educational and not personalized trading advice; always test your approach on a demo account and use risk management tools such as position sizing and stop-losses.
Key takeaways
- A pipette is one tenth of a pip: it’s the fifth decimal for most pairs and the third for yen pairs, giving finer price precision.
- Pip and pipette values depend on lot size and the pair’s quote convention; for EUR/USD a standard-lot pipette is typically $1.
- Brokers quote pipettes to offer tighter-seeming spreads and more precise execution; pipettes matter most for scalpers and high-frequency strategies.
- Trading carries risk; understand how pip/pipette values convert into your account currency and use proper risk management.
References
- https://www.axi.com/int/blog/education/forex/pips-pipettes
- https://hycm.com/en/blog/terminologies/pip
- https://www.oanda.com/us-en/learn/introduction-to-leverage-trading/what-is-a-pip/
- https://www.investopedia.com/terms/p/pip.asp
- https://www.babypips.com/learn/forex/pips-and-pipettes
- https://mondfx.com/what-is-pipe-and-pipette/
- https://www.earnforex.com/guides/what-is-pip-pipette-in-forex-trading/