What it means
A pipette is 1/10 of a pip. Modern ECN platforms quote prices to one extra decimal beyond the standard pip — the 5th decimal on most majors, the 3rd on yen pairs. Pipettes exist for spread granularity ('the spread is 4 pipettes' = 0.4 pip) and for fine entry/exit precision in algorithmic execution.
Why it matters
Most retail confusion around spreads comes from mixing pip and pipette. A broker advertising '0.5 spread' may mean 0.5 pip OR 5 pipettes — same thing, but written differently. Worse: a broker quoting 'spread 5' means 5 pipettes (0.5 pip) on an ECN feed but 5 pips on a market-maker feed. Always verify the unit.
How to use it
Read spreads in pip terms always (convert pipettes by dividing by 10). For comparing brokers, normalise to pips. For algorithmic execution where entry precision matters, pipettes are the unit your code should think in.
EUR/USD bid 1.08249, ask 1.08251 → spread of 2 pipettes = 0.2 pip. EUR/USD quoted as 1.0825 (4 decimals) shows the same level rounded to the nearest pip.
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