It refers to an additional decimal place in the exchange rate. In the case of non-JPY pairs, we have 1.23456 rather than 1.2345, while in JPY pairs, we have 123.456 rather than 123.45. The last decimal place in such pricing is referred to as a pip fraction or tenth pip.

A fractional pip, also known as a "pipette," is a unit of measurement in the foreign exchange (forex) market that represents the smallest price move that a currency pair can make. Traditionally, a pip is the fourth decimal place in most currency pairs. However, a fractional pip extends this to a fifth decimal place, providing more precise pricing. For example, in EUR/USD, a move from 1.23456 to 1.23457 represents a one fractional pip movement. This increased precision allows traders to exploit smaller price fluctuations, improving trading accuracy and potentially enhancing profitability.

A fractional pip, also known as a pipette, is an additional decimal place in forex quotes that increases price precision. Normally, a pip refers to the fourth decimal place in most currency pairs, such as 0.0001 in EUR/USD. However, many brokers now display prices with five decimal places, where the last digit represents a fractional pip. For instance, if EUR/USD moves from 1.10500 to 1.10508, the final digit shows 8 fractional pips, equal to 0.8 of a full pip. This extra level of detail allows traders to observe even the smallest price movements more clearly. It can also lead to tighter spreads in trading. Fractional pips are particularly valuable for traders who depend on quick, small market changes, offering better accuracy and insight into price behaviour.