Why do some brokers use more decimal digits than others?

Hi guys,

I was demo trading on FXDD on MT4 and after this weekend, things got weird: It is like they added another decimal digit to the pips measurement scale.

For example, before it was a 2 pip spread and now it was a 20 pip spread. However, each unit the price moved up or down was 1 and it was as if it moved 10 pips. So FXDD wasn't showing all the pips. I thought it was weird... Before this weekend it wasn't like this.

Then I made another demo account on Alpari UK and the same was going on (first time I was trading with Alpari, so I don't know what it was like before). But on Alpari, they actually had the charts moving through those "10 new pips" while FXDD only jumped from like 1.3260 to 1.3270. Alpari would go to 1.3262, 1.3264... Not only to the multiples of 10.

So I am including pictures to display what I mean. I think FXDD was using a less sensitive pip scale? I mean, I am finding Alpari to be much better to scalp.

Has anyone ever encountered anything like this on a broker? I am sad that I only found out about this now, because I would be better at practice now if I started demo trading in Alpari before. I will check out other brokers, but can you guys say something on this?

It is the first time I see this type of thing and I never knew before that there where different decimals on different brokers. Why do they do this and what is the advantage with more digits? I think it's better to scalp, but is there a general rule or opinion about this?

Thanks,
Scalpa

They changed from 4 decimal pricing to 5 decimal; the 20 pips is 2.0; each digit is now 1/10 of a pip.

Yes, they changed from 4 decimals to 5 decimals so you can trade in fractions of a pip. With 4 digit brokers you can't do that.

Do you think it's better? I am liking it on Alpari, but on FXDD for example, the price moved the same.

The guys were complaining about IBFX adding another digit.... Is there like a big downside on this??

Yes it is simply 5 digit pricing.

On a 4 decimal broker the trades can go in you favor or against your favor.
In other words if you close a trade at 25.3 pips on a 4 digit they will round it down to 25 and that is how price will be displayed. ie: 1.5025 or 1.50253

so you will have to adjust your limits and tps by adding another place.

a 50 pip stop would be 500 in units.

Also, i suggest finding an ECN broker to scalp. Fixed spread market makers are not good for scalping. You cannot place tight stops and the spread never changes.

Scalping with a 5 pip spread is horrible. Also dealing desks don't like it. (from what I know)

THen you will begin getting odd error messages and lagged trades.

If you have been on demo for a few months, I suggest opening a live micro account somewhere. Demos are great to learn, but there is one important, crucial thing they can never teach and that is what it is like to trade your own money live. One of the most important aspects.

Hi XTrade,

Yeah, I'm looking into MB Trading now. I think their price movement seems better than Alpari's and they also have 5 digits and no proximity restriction, with 0 spread sometimes. But with them I can't hedge (or it would be perfect)...

What broker do you use? I'm seriously considering Alpari or MBT but for MBT I have to save the 400 bucks first. Good thing they have low initial deposits though. It it was 2000 there's no way I would go there any time soon.

I had a 100USD account on FXDD before it went to malta. They gave it in christmas 2008 as a gift. But I blew it (then went to practice and study some more).

Cheers,
Scalpa