Up until quite recently, all Forex currency quotes had just four digits. Lately, many brokers have begun offering 5-Digit quotes with the very last digit representing a partial pip. Of course, having 5-Digits is much more accurate and the prices offered are broken even further down. You can also choose whether you deal with pips in half-pip amounts or even other partial amounts. This lets traders, particularly scalpers, to have more room to maneuver. The biggest of traders will also appreciate favorable spreads when using 5-Digit Forex brokers.

What is a 5-Digit FX Broker?

Up until 2007, the Forex trading system of price quotation focused on utilizing 4-digits, or 4-decimal priced quotes. This means that all price movements would include 4-decimal points, to provide accurate movements of the price changes. However, after 2007, the Forex industry introduced a more accurate approach: the 5-Digit priced quote. With 5-Digit Forex brokers, traders will be able to see the price changes and movement up to five places to the right.

The most common trend of the FX industry is that most trading solutions have preferred using 5-Digit quotes, rather than the 4-Digit system. Almost all Forex brokers are classified as 5-Digit Forex brokers, where the last decimal point in the quotation defines a partial value of the pip. It is commonly equal to one-tenth of a pip. Traders should know that the 5th decimal point is provided in a smaller font than the rest of the digits, to represent that the 5th digit is a fraction.

With 5-Digit Forex brokers, they are defined as the brokerage firms who provide currency pairs in five digits after the decimal point. The only currency pairs that are exempted from the 5-Digit trading system are the Yen, since they had a traditional 2-decimal point quotation. However, they have transitioned to the modern 3-Digit price quotation system. The most famous 5-Digit Forex brokers are AvaTrade, OctaFX, and XM.

List of Forex Brokers That Utilize 5-Digit

The following brokers are a list of brokerage firms that provide the 5-Digit option, along with the trading platforms that utilize the element.

Broker
Description
Trade Now
Octafx
OctaFX
Regulation: CySec
Min. Deposit: $/€/£ 5
Leverage: 1:500
Spreads: Low as 0.4 pips

Review


FP Markets
FP Markets

Regulation: ASIC, CySEC
Min. Deposit: $/€/£ 100
Leverage: 1:500
Spreads: Ultra Tight from 0.0 pips

Review


NSBroker
NSBroker
Regulation: MSFA, BaFin, FCA,
Min. Deposit: $250
Leverage: 1:100
Spreads: Low as 1.2 pips

Review
XM
XM
Regulation: CySEC,FCA,ASIC
Min. Deposit: $/€/£ 5
Leverage: 1:500
Spreads: Low as 0.1 pips

Review
Avatrade
Avatrade
Regulation: ASIC,JFSA,FSCA
Min. Deposit: $/€/£ 250
Leverage: 1:400
Spreads: Floating from 1 pip

Review


IC Markets
IC Markets
Regulation: ASIC
Min. Deposit: $/€/£ 200
Leverage: 1:500
Spreads: Low as 0.0 pips

Review


Etoro
Etoro
Regulation: CySEC,FCA,ASIC
Min. Deposit: $/€/£ 200
Leverage: 1:30
Spreads: Variable

Review

XTB
XTB
Regulation: FCA
Min. Deposit: $/€/£ 250
Leverage: 1:30
Spreads: Low as 0.1 pips

Review


IQOption
IQOption


Regulation: CySec
Min. Deposit: $/€/£ 10
Leverage: 1:1000
Spreads: Floating from 1 pip

Review


OlympTrade
OlympTrade
Regulation: IFC
Min. Deposit: $/€/£ 10
Leverage: 1:500
Spreads: Low as 0.0 pips

Review
Globex360
GlobeX360
Regulation: FSCA
Min. Deposit: No min Deposit
Leverage: 1:500
Spreads: Low as 1.6 pips

Review

 

The Advantages of 5-Digit FX Brokers

The trend for such brokers has caught on, although there are brokers who continue to use four digits too. One plus of using a broker that utilizes 5-Digits, is that the price is more accurate. The prices can be broken down more than with 4-digit brokers and this allows traders more room for maneuver. As mentioned, the most favorable spreads are available for the big traders. They can get discounts from 2 pips with major currency pairs, meaning they have a 1.8 pip spread. It doesn’t seem like an awful lot, but if you’re trading huge amounts, it can equate to hundreds if not thousands of dollars saved.

The Disadvantages of 5-Digit FX Brokers

What about the disadvantages? There has to be some, right? Firstly, traders who are experienced in 4-digit prices may find it all a bit more confusing. It certainly takes time to get used it. Many traders who have made the switch made mistakes during their first few attempts at trading with 5-Digits. Once the trader is used to it, the usual trading rules haven’t changed at all.

Another thing to bear in mind is whether you are using an automatic trading program. If your broker decides to switch from 4- to 5 decimal prices, it may mean you have difficulties with the software.

4-Digit FX Broker vs. 5-Digit FX Brokers

There are quite a few significant differences when it comes to 4-Digit Forex brokers and 5-Digit Forex brokers. They are considered very similar when it comes to longer term trading, but it all depends on the preference of the trader.

If a trader is scalping, it is best to use 5-Digit FX brokers, since they offer more opportunity. With 5-Digit FX brokers, there is a higher level of transparency and it is considered a more suitable fit for retail investors, and traders with large assets. With banks, they are known for using the 5-Digit quotation system, due to its transparency. An important note is that the more money is involved in the transaction; the smallest changes in price quotations can make a big difference.

With 4-Digit FX brokers, it is much easier for traders who have small investments and assets. The 4-digit price quotation system is very important and accurate, but it is not necessary for traders who have small assets and investments that they trade with.

In Conclusion

Despite the cons listed, it seems futile to resist the change: 5 decimal Forex brokers is the direction in which the currency market is headed. Trading can be carried out in the same way, once you get it used it that is. Over 95% of Forex brokers offer pricing in 5-Digits today.