Five-digit or four-digit quotes, what to choose for forex trading

Recently, many Forex brokers have appeared that allow their clients to trade on the foreign exchange market using five-digit quotes.

For this reason, some traders are interested in the question of what are the differences between five-digit and four-digit quotes.

The first difference that catches your eye is that in a five-digit quote, one standard point is equal to 10.

For example, if you are working with a currency pair, the size of the spread for which is 2 points, then in the terminal you will see the number 20.

In order to identify other differences and evaluate the advantages and disadvantages of the two options for submitting currency quotes, let’s try to compare the two types of accounts with various quote options.

Before starting testing, I would like to note that on the exchange itself there is no such thing as a 5-digit quote; this is, so to speak, an innovation of the broker for the “convenience” of clients’ work. It’s not for nothing that many brokers show the fifth decimal digit half as big as the rest.

Five-digit quotes – advantages and disadvantages:

1. Displaying the slightest changes in the trend - in fact, you receive information about tick movements; in practical terms, of course, there is not much benefit, but it can be useful for analysis.

This advantage can also be called one of the disadvantages, since such a detailed display of the slightest exchange rate fluctuations only interferes with the work. 2. Setting stops - in almost every brokerage company you will find restrictions on the minimum level of stop loss, take profit and trailing stop orders. So, when using a five-digit quote, these values ​​are reduced tenfold.

That is, if previously you could not place a stop loss closer than 10 points to the current price, now these 10 have turned into a standard 1 point.

Which is quite convenient when using some Forex trading strategies. 3. Minimum deviation - when working with DCs that practice market execution of orders, when opening a new position, you need to set such an indicator as deviation (permissible slippage). As a rule, it cannot be set to less than 1 standard point, and with a 5-digit quote this value changes to 0.1 standard points.

4. Application in scalping – the 5-digit quote is ideal for trading using the scalping strategy, especially when it comes to working with large volumes and the shortest transactions. For example, when opening a position with a volume of 10 lots, one point of trend movement is about $100.

And if the trend dynamics are low, you can close transactions with a profit of literally 0.5 standard points or 5 points.

at a five-digit quote. Considering the disadvantages of 5 signs, we can say that the main disadvantage is the inconvenience of perception, the exchange rate is constantly changing, with sharp jumps, it seems that there is high activity in the market, but in reality the price has only changed by a couple of points.

So there is a high probability that some scripts ( advisers , indicators) will not work on such accounts.

If you are just starting to trade, you may not notice much of a difference, but for those who are more accustomed to 4-digit quotes, it will be difficult to get used to at first; you constantly have to remove the last digit in your mind.

Recently, more and more stock brokers are switching to five-digit quotes, thereby eliminating the problem of choice. That is, most accounts come with five digits by default.