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.
Here is a list of forex brokers that utilize 5 digits
MAS, JFSA, DIFC
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 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.
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.