# What are the small numbers next to the pip in forex?

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In forex trading, traders often come across small numbers next to the pip value. These numbers refer to the fractional pip, also known as pipette, which is a smaller unit of measurement compared to a pip. In this article, we will explain what the small numbers next to the pip in forex are and how they affect trading.

### Pip and Pipette

To understand the small numbers next to the pip, we must first understand what a pip is. A pip is a unit of measurement used in forex trading to indicate the change in the value of a currency pair. It stands for “percentage in point” and is usually the fourth decimal place in currency pairs. For example, if the EUR/USD pair moves from 1.1000 to 1.1005, it is said to have moved 5 pips.

However, some currency pairs are quoted with a fifth decimal place, which is called a pipette or fractional pip. The pipette is one-tenth of a pip, which means that a movement of 1 pipette is equivalent to a movement of 0.1 pips. For example, if the EUR/USD pair moves from 1.10005 to 1.10006, it is said to have moved 1 pipette.

### What Do the Small Numbers Next to the Pip Mean?

The small numbers next to the pip indicate the number of pipettes. For example, if the USD/JPY pair is quoted as 108.325, the last digit “5” is a pipette. If the quote changes to 108.326, it means that the price has moved by 1 pipette. The small numbers next to the pip are used to indicate the precise price movements in a currency pair.

### Why Are Pipettes Important?

Pipettes are important because they allow traders to have a more accurate view of the market. In forex trading, even the smallest price movements can have a significant impact on profit and loss. Therefore, knowing the precise price movements can help traders make more informed trading decisions.

For example, if a trader is using a trading strategy that requires a tight stop loss, knowing the exact price movements can help them set a more accurate stop loss level. Similarly, if a trader is using a scalping strategy, where they aim to make small profits from multiple trades, knowing the precise price movements can help them identify potential entry and exit points.

### How Do Pipettes Affect Trading?

Pipettes can affect trading in several ways. Firstly, pipettes can affect the spread, which is the difference between the bid and ask price of a currency pair. In currency pairs that are quoted with a fifth decimal place, the spread is usually tighter, which means that traders can buy and sell at a more favorable price.

Secondly, pipettes can affect the calculation of profit and loss. As mentioned earlier, even the smallest price movements can have a significant impact on profit and loss. Therefore, knowing the precise price movements can help traders calculate their profit and loss more accurately.

Lastly, pipettes can affect the execution of trades. In some cases, brokers may have different rules for executing trades that involve pipettes. For example, some brokers may require traders to specify the number of pipettes they want to trade, while others may round up or down to the nearest pip.

### Conclusion

In conclusion, the small numbers next to the pip in forex refer to the pipettes, which are a smaller unit of measurement compared to a pip. Pipettes are important because they allow traders to have a more accurate view of the market and make more informed trading decisions. Pipettes can affect trading in several ways, including the spread, the calculation of profit and loss, and the execution of trades. Therefore, it is important for traders to understand the concept of pipettes and their impact on forex trading.