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Five digits forex brokers really have helped the whole trading industry to grow rapidly, and helped thousands of traders to get more transparent pricing while trading Forex and many other assets.
That’s why if you’re interested in forex trading and 5 digit forex brokers, you can simply check out our top 10 best forex brokers article.
In fact, to date there’s not a single Forex Broker that is not offering this kind of feature, and reading the best forex brokers article can be a very efficient shortcut.
Going back to the main topic, without further ado, let’s get into discovering the best 5 digit forex brokers.
Table of contents
What is a 5-Digit Forex Broker?
Simply put, a 5-digit broker is a broker that offers a 5-digit decimal pricing system. Unlike other brokers that only offer a 4-digit pricing system.
5-digit pricing systems are a relatively new concept that have slowly gained traction since 2007, where before then no one had heard of a 5-digit pricing system.
Although now you will see that a lot of brokers use 5-digit pricing systems as part of their approach these days since there are many benefits. Some benefits include paying less for your trades, as well as better execution speeds.
Top 10 of the Best Five Digit Forex Brokers
Why are 5 digits important with forex brokers?
Before 5 digits became the norm with forex brokers, many if not all brokers were using a 4-digit price system. However, most forex brokers have started using a 5-digit price system on their platforms now.
Why is this?
One reason is that 5-digits give traders more accuracy, and there is a lot more information with the extra digit as prices can be broken down further. The addition of this extra digit allows traders who don’t have large accounts to trade half pips instead of full pips.
For scalpers, this is great news as the extra digit can give them pin-point accuracy and more room to play with. Another important reason for the importance of a 5-digit pricing system is that it has reduced the cost to trade making it cheaper for traders to execute trades.
Price movements: 5-digit vs 4-digit Broker
Here is an example of the old 4-digit spread vs the new and improved 5-digit spread. For example, say we had a 4-digit price on the EUR/USD of 1.5840 bid/1.5842ask (2 pips).
And now let’s examine what a 5-digit spread would like in comparison to the 4-digit one; EUR/USD of 1.58401 bid/1.58428 ask (2.8 pips).
You can see the difference between the two, where you get 0.8 extra pips of information with 5 digits which is more accurate when compared to the 2 pips with the 4 digits.
Here’s another example; let’s say we have a bid/ask price on GBP/USD of 1.4123 bid/1.4123 ask. You can see that there is a spread of 0 pips when using a 4-digit price system. However, when we consider a 5-digit price system we get more information leading to more accuracy. 1.41230 bid/ 1.41234 ask, which is a spread of 0.4 pips. Again we can see here that we have more information to work with, because with 4-digits you can’t detect spreads lower than 1 as it always appears to be 0 without the decimals.
With the accuracy given by the 5th digit means better transparency for traders, which forex brokers call precision pricing.
Forex Trading platforms with 5-digit pricing
More and more trading platforms are conforming to the 5-digit pricing system, such as the following:
Expert Advisors Trading with 5-digit brokers
Some expert advisors that have been built on the basis of 5-digit pricing systems are not compatible with forex brokers who offer 4-digit prices. So keep this in mind when you are looking for a forex broker, as you will need to find out if they can handle expert advisors that have been calibrated using 5-digits.
Furthermore, in the case that they are compatible they run the risk of being less efficient, which in turn will have a negative impact on your trading results. The reason for this is due to the fact that 5-digit robots are more precise and efficient, but only when they have the relevant data to work with.
Pros of a 5-Decimal Pricing System
There are some pros when dealing with a 5-decimal pricing system, which include the likes of lower spreads. It also incentivises higher trading volume by reducing overall trading costs, and this will entice traders to join a platform, so they aren’t paying as much to be able to trade.
One of the most attractive things about a 5-decimal pricing system is its level of accuracy and precision when it comes to filling orders. Accuracy is everything when it comes to trading, as it could mean the difference between being filled and missing a profitable trade.
It also promotes high frequency trading, which is a method of trading that includes the use of high-level programs to compute large amounts of orders in a fraction of a second. It also uses powerful algorithms that are capable of analyzing multiple markets at once.
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