What is the smallest pricing increment that you've seen for Forex? I've searched around, and according to The Google and Wikipedia, the smallest Forex price increment is a pip; specifically, $0.0001. On my terminal, I see a fifth significant figure, that appears as a small 5, sorta like this, except superscripted: $31.25235 Do any exchanges carry Forex prices to more significant figures? Thank you.
I don't trade Forex but in futures the smallest increment, tick (pip) varies in size as to the currency pair in question.
Fx prices in the 5-digit pricing system are known as fractional prices, and the value of the last digit on these pairs is 1/10th of a pip. The extra pip is known as a fractional pip or a pippette, and provides more precise pricing of an currency pair. I believe the pippette pricing is pretty much the norm these days - It is how the several Fx brokers I use are priced.
Hmmmm... do counter currencies with a relatively large fractional value against the base in pricing carry more significant figures? Rounding in this situation can cost. Example: Assume these exchange rates. Note the relatively large fractional value of the JPY against the USD of about 1/100th: Code: BID/ASK USD/JPY: 111.17325/111.17339 JPY/USD: 0.00899/ 0.00904 - Assume that the Ask price of 0.00904 was rounded up from 0.009035 - Assume we're buying USD1,000,000 of JPY Code: USD1,000,000/0.009035 = JPY110,680,686 USD1,000,000/0.00904 = JPY110,619,469 A difference of JPY61,217. If we convert this back to USD dividing by the above Ask of 111.17339, we lost USD550.65 due to rounding! In reverse, when buying about the same value USD with JPY, the difference is USD0.04: - Assume that the Ask price of 111.17339 was rounded up from 111.173385 - Assume we're buying USD1,000,000 of JPY Code: JPY100,000,000/111.173385 = USD899,495.86 JPY100,000,000/111.17339 = USD899,495.82 The point is that since there's relatively large difference in decimal representation of the currency values, the loss of pricing accuracy has a more significant effect when buying JPY with USD. In other words, since the JPY is about 1/100th USD, we need more significant figures to accurately price the yen against the U.S. dollar. Better would be to carry the JPY/USD prices out to 7 significant figures. Welcome to my red room of rounding error pain.