A pipette is a fractional pip, equal to one-tenth of a pip, used in forex trading to provide more precise measurements of price movements in currency pairs. While a standard pip typically represents a 0.0001 change in value for most pairs, a pipette adds an extra decimal place, making it a 0.00001 change. This allows traders to better assess market fluctuations and is particularly useful in high-precision trading strategies. For example, if a forex pair moves from 1.23456 to 1.23457, the change can be expressed as a one pipette increase.