One tenth of a pip, the fifth decimal place on most pairs and the third on yen pairs, added so brokers can compete on sub-pip spreads.
Fractional pricing arrived when competition pushed spreads below one pip. A quote of 1.08403 has a pipette of 3. Platforms usually print it smaller or raised, and some call it a point, which is confusing because point means something else in indices and cfd pricing.
Pipettes matter mainly for cost comparison. A spread quoted as 0.3 pips is three pipettes, and a broker advertising 3 points may mean 0.3 pips or 3 pips depending on their convention. Check the decimal count before comparing.
Example: EUR/USD bid 1.08401, ask 1.08424. The spread is 2.3 pipettes, or 0.23 pips, which costs about $2.30 per standard-lot round trip.
Original diagrams for the ideas on this page. Illustrative, not real market data.
The bid-ask spread. Buy orders sit below, sell orders above, and the gap between the best bid (50.01) and best ask (50.04) is the spread you pay to cross. Bar length shows the size resting at each price.
Educational only, not advice. Spotted an error? Post in Site Feedback.