5-Decimal Pricing Forex Brokers

5-Decimal Pricing Forex Brokers

Forex price quotes are usually listed in decimal places. Prior to 2011, many retail forex brokers listed their forex quotes according to the 4 decimal pricing system. So a typical forex quote for the EURUSD would be stated as 1.3245/1.3248. However, a 5-decimal pricing system has been put in place, which serves to cut down the amount that traders pay on spreads.

 

Recommended Forex Brokers that offer 5 Decimal Pricing:

1
Min. Deposit
$10
Exclusive promotion
Our score
10
55+ currency pairs available
Trade on a trusted platform
24/7 support via live chats, email or phone call
Start Trading
Description:
LonghornFX is a true ECN STP broker dedicated to delivering a superior trading experience to traders no matter their level of experience. Their services are based on transparency, innovation and efficiency, ensuring an unparalleled trading experience for all.
Payment Methods
Credit Card, Debit Card, Visa, Bitcoin
Full regulations list:
LonghornFX offers high-leverage trading on a wide variety of assets. Trading with leverage carries a degree of risk which may result in losing more than your investments. Clients should practise risk management to protect themselves from losing more than they can afford when trading with leverage.
2
Min. Deposit
$10
Exclusive promotion
Our score
9.3
0% Commission Account
Low Spreads
Eco-Account Option
Start Trading
Description:
CedarFX is an eco-conscious broker offering 0% commission trading on 170+ assets, including Forex, Cryptocurrency Pairs, Stocks, Indices and Commodities. With up to 1:500 leverage, no-fee transactions and low spreads, traders can make the most of their funds. CedarFX also offers an Eco Account option to support tree planting and sustainability projects.
Payment Methods
Bitcoin, Credit Card, Debit Card
Full regulations list:
Please ensure that you fully understand the risks involved, taking into account your investments objectives and level of experience, before trading, and if necessary seek independent advice.
3
Min. Deposit
$200
Exclusive promotion
Our score
8.7
Join the Social Trading revolution. Connect with other traders, discuss trading strategies, and use our patented CopyTrader
eToro is the world’s leading social trading platform, offering a wide array of tools to invest in the capital markets
Largest number of currency pairs to trade
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Description:
eToro is a multi-asset investment platform with more than 2000 assets, including FX, stocks, ETF’s, indices and commodities. eToro offers a wide range of currency pairs and other trading instruments. eToro users can connect with, learn from, and copy or get copied by other users.
Payment Methods
Wire Transfer, Bank Transfer
Full regulations list:
CySEC, FCA
Cryptoassets are highly volatile unregulated investment products. No EU investor protection. eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro. Your capital is at risk.
4
Min. Deposit
$10
Exclusive promotion
Our score
8.5
Can fund with BTC
64 global companies including Netflix and Amazon
Free deposits and withdrawals
Start Trading
Description:
EagleFX is an online digital asset, Forex and CFD broker providing traders across the globe with cutting edge technology to trade the world’s markets. Our focus has been to change the way people trade Digital Assets and Forex. We are driven to provide traders with incredibly low-cost pricing across all Digital assets, FX, stocks, indices, commodities and futures along with industry-leading 24/7 live customer support.
Payment Methods
Credit Card, Debit Card, Bitcoin, Wire Transfer
Full regulations list:
EagleFX offers leveraged trading on a range of assets within its platform. CFD and Spot Forex trading do carry a degree of risk which may result in you losing more than your initial investment. Please ensure you fully understand the risks involved with leveraged trading and ensure this is not detrimental to your personal or institution's financial well being.
5
Min. Deposit
$200
Exclusive promotion
Our score
7.9
BlackBull Markets’ unique feature lies in its stated goal of delivering an “institutional” trading experience to retail clients
No-Dealing Desk Broker (NDD), with Straight Through Processing (STP) all done on a true ECN
State of the art Equinix servers, based in New York (NY4), London (LD5) and Tokyo (TY3)
Start Trading
Description:
BlackBull Markets is a top-tier, award-winning, and financially registered forex broker with a globally trusted presence. Operating since 2014, BlackBull Markets is now the fastest growing financial services business in New Zealand. We were founded with the goal of becoming the leading online Financial Technology and Foreign Exchange broker. BlackBull Markets is a true ECN, No Dealing Desk brokerage specializing in Forex, CFDs, Commodities, Fibre Optic Communications and Fintech solutions for a global clientele.
Payment Methods
Mastercard, Visa, Bank Transfer, Neteller, Skrill, UnionPay, FasaPay
Full regulations list:
FSPR, FMA New Zealand

How does this work?

We gave an example of a typical price quote for the EURUSD. This assumes that the 1 Euro is able to purchase 1.32480 USD from the broker.

However, the introduction of a fifth decimal place further fractionates the last 0 digit. So if the last digit were to be displayed as 0.0, the introduction of the 5th decimal place will make this 0.1 all the way up to 0.9. However, it is not possible to display two decimal points in a price quote as 1.32480.1 or 1.32480.6. So the display creates the 5th decimal place as a superscript, written like this:

EURUSD = 1.32450/1.32486 where 0 and 6 are fractions of the 4th decimal place.

As a result of this fractionation, brokers can then provide tighter spreads, provide pricing which is more accurate and also give traders a trading environment with better liquidity and execution with reduced slippage.

The change in pricing also affects the JPY currency pairs, which have traditionally been quoted to 2 decimal places. These are now quoted to 3 decimal places. Trading platforms started to see the changes as from 2011, and right now, there is hardly any broker which does not provide 5 decimal pricing.

5-decimals-currency-quotes

Despite the fact that several 5 decimal forex brokers have cropped up in the last three years, many beginner traders still do not understand how to use the platforms provided by these 5 decimal forex brokers. They get confused by these decimal places, especially as regards the effect of the change to stops, profit targets, entries and exits. Many expert advisor programmers also have the same problem, as the changes have altered the way forex robots interpret parameters. It is for this category of market participants that the explanation of how to utilize pricing by the 5 decimal forex brokers is prepared.

Understanding the 5 Decimal Forex Brokers Pricing

a)    4 Decimal Pricing:

This is how the pricing system for 4 decimal forex brokers works. These platforms also provide 2 decimal pricing for all JPY pairs/crosses. If for instance, we have the USDJPY quoted at 81.55, and we have the EURUSD quoted at 1.3369, how would the stops and target areas be calculated? If the trader wants to have a 50 pip stop loss and an 80 pip profit target the stop would be set at 81.55 – 0.50, = 81.05. The take profit would be set at 81.55 + 0.80 = 82.35.

The decimal pricing system also affects how a trader’s profit or loss is displayed. If the price moves to 81.84, the price has moved into profit territory by 29 pips, and this would be shown on the platform’s terminal window as 29. If the price fell to 81.25, then the price has moved by -30 and this is what would be shown on the platform. For illustrative purposes, the spread calculation has been omitted.

Taking the EURUSD as an example, if you sell the pair at 1.3369, with a 70 pip stop loss and a take profit target of 200 pips, the stop  would be set at 1.3369 – 0.0070, which is at 1.3299. Likewise, the take profit would be set at 1.3369 + 0.0200, which is at 1.3569. The display of profit or loss would be shown as either -50 if the price falls to 1.3319, + 100 if price rises to 1.3469.

 

b)    Pricing by 5 Decimal Forex Brokers

The previous examples were easy as most of you may be familiar with 4 decimal pricing. But what happens when the price is further decimalized by 5 decimal forex brokers to create a 5 decimal pricing format? This is how it will play out.

Stops and Targets

Take for instance, the GBPJPY would be quoted at 145.352. A short order on the GBPJPY at that price with a 60 pip stop loss and a 180 pip profit target would mean that prices for each would be listed at 145.352 + 0.600 (145.952), and at 145.352 – 1.800 (143.552). Take careful not of this. This is because in the 5 decimal pricing system, we do not start counting the pips from the last decimal because this is a fraction of the 2nd decimal place (Yen crosses) or of the 4th decimal place in other currencies.

Taking the AUDUSD as an example, a long order at 0.84258, with a 155 pip stop loss and a take profit target of 310 pips, would lead us to set the price in the order box as 0.84258 – 0.0155 (0.82708) and take profit at 0.84258 + 0.0310 (0.87358).

Profit and Loss Display

If profit and loss is shown as points (as opposed to amount of dollars in unrealized profits/loss) and the price had fallen by 149 pips, it will be shown as -1490 (which is 149 and a fraction of 0). If the price moved up by 185 pips, it will be shown as 1850 points (which is 185 and a fraction of 0 added to it).

5 Decimal FX Brokers

There are several 5 decimal FX brokers in the market, and you will be able to see a comparison table which shows their various features. But the most important metrics you should be conversant with are:

a)    How to interpret the 5 decimal pricing system

b)    How to set stop losses and take profit targets

c)     How to interpret the unrealized profits and losses as they are displayed on the terminal window of your platform.

 

Also if you are looking for forex brokers then we have a comprehensive list here.

Adam

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Adam is an experienced financial trader who writes about Forex trading, binary options, technical analysis and more.

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