What is a Forex PIP? The meaning of PIP in FOREX trading
If you were new to forex trading, you surely would ask what a PIP is and how important it is in forex trading. Let us understand what a Forex PIP is, what it does with currency trading and how it can create earnings to traders.
The word PIP in forex trading stands for Percentage In Point. By definition a currency PIP is the smallest value increment that currency can make.
In the currency trading world, the word PIP is the body and soul of every Forex trader. Every time they enter a position, they are immediately paying a pip spread and the price movement happens within the entire trading day produces a difference called PIP. The only way for you to know how many pips a certain pair has in each move, all you have to do is to subtract the current price of the pair from the previous price. Example the EUR/USD currency pair with the current price of 1.0100 moves up to 1.0101, that certain pair now has one pip difference. Through this pip is where you will compute your profit and loss in trading Forex. You will just have to multiply the pip’s value with the number of pips you have gained or lost in a certain trade. However, the PIP value is a big question for every Forex newbie.
To know a PIP’s value, let us have some mathematics here and learn how to calculate pip in Forex trading. With the above-mentioned example, the formula is .0001 divided by the exchange rate (price) = pip value. Therefore, at the price or exchange rate of 1.0101, the computation will be .0001 / 1.0101 = .000010. However, we need to go back to US dollars, so we need to add another calculation, which is EUR x Exchange rate. Therefore, the calculation is .000010 x 1.0101 = .0001. If you are confused with the calculation or if you are not a big fan of mathematics, you do not have to worry in computing these figures because your Forex broker will take charge all of these computations. All you have to do is to learn and master the basic and enter your trade whenever you feel you are on the right position to enter one. What’s important in learning to compute the pip and its value is, in-order for you to have an idea on how and where did they get all those figures you see in your trading platform.
Now that you already know, what a PIP is and how important it is for you as a Forex trader, surely, you now have the idea how you can earn some bucks doing Forex trading.
What is the success secret of online Forex trading gurus?
If you are a beginner at forex trading read the rest of this article carefully to become a successful online forex trader.
Walk Before You Run For Online Forex Trading Success
If you want to be successful with online forex trading, you have to start slow. This is not what most beginners want to hear. They want to jump right in and start making tons of money tomorrow, or even better, today. But this is not how it works.
This is partly the fault of advertising. It is advertising that trains us to want it all, right now. It is down to the brokers, robot developers and other people who make money from selling forex trading services. They show mouth watering pictures of the amazing houses, cars and lifestyle that you can have when you are earning thousands of pounds a day as a top level forex trader.
What they do not say, or only in the fine print, is that this is the tiny minority of traders and they didn’t get there without some sleepless nights, some losses and some hard work. Most online forex trading beginners lose money: in fact, most lose so much that they quit, and it is usually because they tried to run before they could walk.
There are certain important things in forex trading that you can only learn from experience. These include how to handle the stress and how to deal with the situations that arise in the real market. It is not about systems.
Systems have their place but they do not have to be complex or difficult. In fact, simple systems are better because you do not have to spend so long on analyzing the signals before you open a trade. However, you do have to be sure that you have enough of an indication that there is a good chance of a successful trade. Never trade on hopes or intuition. It simply does not work.
Another point where simplicity works well is in your training. There must be thousands of books, courses, ebooks, video series and websites that all claim to teach you the best way to success with online forex trading. Most of them probably contain a lot of good information. But the sheer number of them can cause people to chase their tail, hopping from one to another without ever completing anything.
So if you value your sanity, make a rule that if you buy, attend or download a forex course you will work all the way through it and test it out (in demo) so that you have completely understood it before getting into anything else. Do not just flick through it and then look for something else because it did not look as easy as you hoped.
If you keep looking for the magic system that will turn the average person a millionaire by the end of the week you will just waste time and money because it does not exist. If your temperament is suited to forex (you are cool headed and analytical) you will learn faster than somebody who is not, but you still have to study and practice in a disciplined, focused way. Then it may be possible to make money with online forex trading.
How to Protect Your Profits With Forex Hedging Strategy
Forex hedging strategies are used by some traders to protect their profits against possible reversals while leaving the original trade open. Other traders avoid it because they think it will be too complicated. But that does not have to be true. Foreign exchange hedging tactics are not necessarily so difficult. First let’s see what exactly is forex hedge trading.
What Is Forex Hedging?
A hedging trade is a kind of insurance that will pay out if things go against your main trade. It can be entered into either right away at the same time as the original trade is opened, or later. The benefit of opening the second trade later is to protect profits already gained.
Assuming that your main position is in the spot forex market, the secondary or opposing trade may be in the same market or another. It could be another spot transaction either in the same currency pair or in a different but related currency pair. It could also be in another market, such as forex derivatives, that is, options or futures. Forex options is the most popular choice.
How To Hedge A Forex Trade?
The first step when considering a forex hedging transaction is to analyze the risk of the original trade. It is unlikely that a retail trader would try to hedge every trade, but only those that involved unusual risk, for example a position size much greater than usual, or one where the risk changed for some reason since the trade was opened, or a mistake was made when taking out the original position.
Once the risk is known, we would subtract our risk tolerance, probably the amount of risk that we are used to dealing with in forex trading. Of course in some cases, where the trade is already in profit, it is possible to reduce the risk to zero. Otherwise the difference between risk and tolerance is the amount of risk that we need to balance out with the hedging trade.
Then we can look at the various possible strategies, including closing out part of the trade if in profit, or opening a transaction in derivatives. Decide on the strategy after considering all of the options, and act.
After a second position has been opened, it is very important to continue to monitor the markets. The situation will be constantly changing and it may be possible to close one trade, both, or parts of both at a time when you can maximize profits beyond the original plan. However, if you are making decisions on the fly, be careful not to allow the risk to increase.
Using forex hedge strategies does require more analysis than general forex trading. Paper trading a few hedging positions is recommended because this will help you to understand the range of possibilities and how they work. Once in the live market, decisions have to be taken carefully without either rushing or wasting time. This is not a strategy for currency trading beginners but forex hedging has its place in the toolkit of an expert trader.
If you are looking for an automated forex hedge system that will protect your funds as well as maximize your profits, I suggest you to check out Forex Pip Stack review here.
Forex singals are trading signals which will let you know when to enter and close trades. While many currency traders prefer to take their forex trade signals from technical analysis tools such as Forex Killer or the FX Invincible (see Forex Invincible review), the importance of the fundamental factors in the market should always be kept in mind. In the end, the market is driven by economic forces, not by price charts. So we should not forget to check the financial and economic news alerts and announcements that everybody has access to online.
New traders are often discouraged by the number of economic factors that have to be taken into account in fundamental analysis. Not only are there a lot of them, but news is being released all over the world. It is not enough to watch the financial news from the USA. You have to keep on top of all of the currencies involved in any pairs that you trade.
However, the good news is that some factors are more important than others. Even better, a lot of them are related, so you can often form an idea of what is likely to happen from the knock on effect of different announcements. In this article we will look at the most important fundamental indicators that might be used for forex trade signals, and at the relationships between them.
Top of the list is interest rates. An interest rate rise or fall in the USA or one of the other major players in the forex market can have a ripple effect across many currency pairs, even those that do not include the affected currency. Understanding this effect can provide forex trade signals for some traders who work with fundamental analysis all of the time.
The reason that the interest rate affects currency values so strongly and so fast is really quite simple. Unlike other factors that tend to be reported monthly or quarterly, a change in the interest rate can happen at any time. It is therefore the fastest indication that a country’s economy is strengthening or weakening.
An interest rate rise is a positive sign of a strong economy. International investors will immediately be drawn to investing in that country. In order to buy stocks or shares there, they need the country’s currency, so there will be a bigger demand for that currency, pushing up its value.
At the same time, they will be selling investments in countries with weaker economies to free up some capital. This leads to a drop in currency prices in countries that are perceived to be weakening.
So interest rates are probably the most important factor in determining fundamental forex trade signals. However, there are many other factors which can indicate the strength of the economy in a country. All of these will have some impact on interest rates and on currency prices. Here are some of the most significant:
- Consumer Price Index (CPI)
- Producers’ Price Index (PPI)
- Gross Domestic Product (GDP)
- Payroll or Employment figures
- Retail Sales
- Durable Goods Orders
These indices might have different names in different countries, but a rising index will always indicate a strong economy. Some rise in the currency price can be expected in the short or long term, unless of course the announced increase in an index was less than expected. If that happens, the market may already have moved further than it should and there could be a retracement. It is important to keep this in mind when using indicators such as these for forex trade signals.
Forex day trading can be fast and furious especially if you are into forex scalping. You will need a good day trading course or a good forex scalping system such as Delphi Scalper to help you make the most of it. That means, of course, making profits instead of losses, and ending most days with a tidy sum added to your account. But it is not always easy. In fact, many beginners lose big when they start forex trading. Why is this and how can you avoid it?
1. Forex Day Trading Profit Targets
The aim of forex day trading is to enter and exit a trade within the same day and make some profit. A good forex day trading course often advises aiming for a certain amount of profit each day. It could be a set number of pips such as 25 or 50 pips or it could be expressed in terms of your funds, for example 2% of your total balance. That may not seem much but if you actually succeed in making 2% of your funds each day, the cumulative effect of adding this back into your account would mean that at the end of a year (240 trading days) your funds would have multiplied over 100 times: for example, from $1,000 to over $113,000.
This sounds great but the effect of feeling that you ‘must’ make a certain amount each day, either in pips or in dollars, can add to what is already a high stress atmosphere. Some days the market just is not right for trading. What do you do? Stay out and feel you have failed because you didn’t make your 2%? Try for 4% the next day to make up? Or trade anyway, and quite likely end up with a loss instead of a profit?
So it is very important to cut yourself some slack if you are using this type of trading system. If the signals are not right, do not trade. Do not expect to make your target 5 days a week, but aim instead for 4 profitable days and 1 day where you break even or do not trade. That is much more manageable and will reduce the risk that comes from feeling that you must make a certain number of trades in the day.
2. Complex Forex Trading Systems
Many forex trading systems are too complex for beginners who are trying to follow a day trading course plan. When you are day trading you have to keep in touch with the market all of the time. If there are too many indicators to check before you can open or close a trade, it is much more likely that mistakes and missed opportunities will occur. You also don’t want to be operating more than one currency pair, at least not in the beginning.
Look for a simple system that you understand and can operate quickly. Often times this will be just as profitable as something more complex. Unfortunately, consumers think that more means better and this applies to forex trading systems as well as anything else. It means that somebody selling a simple but highly profitable system will receive a ton of refund requests because their ebook was too short or easy to understand. The result is that many writers will make their system more complex than it needs to be, just to keep customers happy. It’s a crazy situation. Don’t buy into that process but look for the simplest profitable system that you can find.
3. Analysis Paralysis
We are lucky these days to have many ways of testing forex trading systems. Free forex charts give us all the past price information that we need for complete back testing, and brokers are falling over each other to get us to try their demo accounts. It is easy to stay in demo almost indefinitely, testing and tweaking one system after another.
But if you want to make any money with forex trading, the moment must come when you step into the real market and take a real risk. You can start small but do start. If your forex day trading course has prepared you well, you should be able to handle it. If you are going to try forex scalping I highly recommend you to check out Delphi Scalper review website.
Global forex trading has expanded in the last few years. You might have a number of web sites, books and software on forex trading. Around the world, more and more individuals are getting connected to the cyberspace and gaining access to the opportunity to invest in the currency trading marketplace. Forex is a risky investment choice but it brings the chance to earn lots of cash. Of Course, this draws a large number of people to forex and people who offer related service and products such as automated forex robots like Forex Black Panther and FAP Turbo.
The safest way to start out if you want to make profits with global forex trading is to focus on not losing. That may sound obvious but it is crucial. Numerous individuals start out with dreams of going rich almost overnight or giving up their occupations to become a full time forex trader. This is possible only if you take off small. It is really crucial not to risk too much in the starting.
New traders will discover that the trend is only predictable to a certain extent. Even the most efficient foreign exchange trading system will make losses at times. It is a must to accept this. At firt you may be lucky and experience a good run of profit making trades however do not become over confident.
We know that, most currency trading brokers offer a demonstration account so that any trader can try out their services without taking any risk. This also gives you a chance to grow skillful in forex trading before you go live with actual money. You can examine systems and find one that works for you.
When you are utilizing a demo account, try to work precisely like you would if you are playing with real money. This will help you distinguish a profitable system that you can operate comfortably in the actual global forex trading market place. Understating strain is essential when you start foreign exchange trading on live account because high levels of stress oftentimes lead to poor decision making or slips.
The global forex trading marketplace is available 24 hours a day Monday through Friday. It works in various time zones that the entire day and night is covered. It is truly a global market in that you are not limited to trading in your own nation’s currency. You can deal in any currency pair that your forex broker offers. In most instances you can even open accounts with fx brokers in different nations if that suits you, though local laws vary on this issue. Some brokers operate global offices and will require you to sign up with their office in your own state. Nevertheless, it is a market that is very free of boundaries.
The round the clock market is an advantage for most people in other means too. For example, it means that you could perform trading during outside of business hours. This presents you much more flexibility than with stock trading. The global forex trading market permits you to trade in the night or early mornings, fitting around the other activities of your day.
FAP Turbo 50 is finally released. As you probably know FAP Turbo is the most successful commercial forex trading robot. With more than 65,000 customers FAP Turbo beats all other robots in the market in terms of number of satisfied customers. (See FAP Turbo review online.) The new version 50 of FAP Turbo has got many exciting features. Take a look at them below.
What is new in FAPTurbo 50?
The major highlight of FAP Turbo version 50 is the introduction of GBP/USD (GBPound vs US Dollar) currency pair. This 6th currency pair is introduced after 5 months of live trading and testing. Also Fapturbo50 includes new and improved default settings for the EUR/CHF and USD/CAD currency pairs to improve your trading performance.
Where can I download FAP Turbo 50?
All the existing customers will get the updated version 50 for free. If you are not an exisiting customer you can download FAP Turbo 50 here.
How do I install FAP Turbo 50?
If you are a current fapturbo customer, go to the Members area “Download” section, and download the new EX4 file. Place this new ex4 file in your /experts folder. Make sure you have the original fapturbo3.dll in the libraries folder. You don’t have to delete the old .ex4 file. Just copy and paste to the Experts folder and you are ready to use the new FAP Turbo 50 expert advisor.
As soon as you go to a bookstore either a regular shop or online you will see a whole series of currency trading book choices. There are some printed books that have more or less become classics in the 3 decades that foreign exchange trading has been an established form of speculative investment. Nevertheless, many of these may possibly seem obsolete now that we have online forex trading that anybody can carry out from home. A book that was printed during the days when Fx trading was all undertaken by the big banks might still be of use, but it takes some effort for the small home based trader to employ it to our present situation.
Scores of books are also obtainable now online in the form of digital file. At times these are normal printed books that the writer has changed into an online format, and sometimes they are ebooks only. For example the book Forex Trading Made EZ is available in downloadable pdf format. You can generally download these right away onto your PC the instant that you buy them with no waiting for delivery or spending any delivery expense. The advantage of the digital books is that, you can either read them on your notebook or take a print out and read like a regular book.. This could be extremely handy.
So how will you confirm that the foreign exchange trading book you are planning buying is not a rip-off?
In fact you need not be concerned too much because it is uncommon for a book or an even an ebook to be a complete scam. Usually you will be sent what you paid for. Whether you like what you are sent is another matter, just as with whatever thing that you receive from mail order or online. In the majority of cases you can get a refund anyway so it must not be a problem.
There certainly are currency trading scams but they typically consist of folks trying to get a hold of your investment money. So do not rush by investing your cash with the first currency trading broker or firm that you see. Veryfy about them through currency trading forums and reviews for customer feedback, and make sure that they are regulated in whatever country they are based in. It is usually best to invest your money through a corporation in your own nation or one that has adequate laws preventing fraud and scams.
Even if your forex book may be an outright fraud, there are still some books that are much more worthwhile than others. For this reason you may have to confirm on the author’s own currency trading experience before you buy the book.
Make sure that the author does not downplay the risks, since forex is a risky thing and you should be entirely aware of that. Search for feedback from other people like you who are using the method into practice and scrutinize their outcome if you can. All of this will help you pick the best forex book to suit your needs from the several books that are obtainable.
How long have you been doing forex trading? If you have been trading foreign exchange for some time you already know the importance having good forex trading strategies which you can stick on. You also need to continuously improve your forex trading system to make it perfect. Sometimes even minor adjustments in the way that you execute your trades can result in much bigger profits.
Today we are going to discuss about one such forex day trading strategy which will maximize your profits. This is a simple strategy, however when applied correctly you can expect to make good returns. Without too much introduction let’s get into the actual strategy..
One of the advices that most experienced traders will give you is to avoid the temptation to hang on to a winning trade beyond your profit target you have set. This is true because forex market is highly volatile and greed can often result in losses. However many a times we come across strong winning trades which can go way up when the market conditions are right. If you pull out too early you are leaving money on the table. This where “Trimming the Scalp” strategy can boost your profits without risk. It is a great method for day trading even though it would be just as valid for a longer term trading.
Here is how it works:
When your winning trade reaches your profit target, close one half of your position. Obviously I assume that you are trading two lots or more. Otherwise go for a forex broker who accepts partial lots. This provides you the flexibility that you need.
So, exit half of your position. At the same time, adjust your stop loss order to one half of the original size too. You can also shift the stop loss to your original trade entry position plus a couple of pips to take account of spread.
You have now closed on half of your profit target, so you already made some profit, plus you have a half size order open in the market that cannot lose because its stop loss is set at point zero. Now go ahead and set a new price target and put a limit order at that point. This could be the same number of pips as your normal price target or a little less. Do not make it more.
This simple day trading strategy will ensure that you make profit on a winning trade and maximize the returns when the trend is right without taking any risk.
However do not try to apply the “Trimming the Scalp” day trading strategy on a losing trade. That means, never hold on to even half of your position in a losing trade. As I said earlier “Trimming the Scalps” day trading strategy when applied to winning trades will maximize your wins. On the contrary if you apply it to your losing trades it will maximize your losses. Learn to accept minor losses and move on. Forex trading is not all about winning and losing, it is about making money.
Forex Trading for Newbies
Anyone who wants to make cash from currency trading, will require some solid currency trading strategies. Forex is similar to anything else in in our country. If a person wants to perform it well, you require proper training and some practice. And if you are planning to get into forex you better do it well otherwise you could lose your shirt.
Getting the practice is not a problem since mostly all Fx brokers will let you open a free demo account. Actually they encourage it, because they are hoping that once you are seeing profit in your currency trading demo account you will go ahead and invest real cash with them. So that they can make money from the spread or the fees that they charge on your account. Hopefully you will make enough money to pay them and still have money left, so everyone is making money.
Constructing profitable currency trading strategies is a tough. You can find lot of currency trading systems online, but many are very complex for the beginner. What you probably want is something very straightforward so that you can start currency trading on your demo account right away.
If you search on google you can find that there are plenty of software systems which brag to make you huge amount of money. If you are a fresh trader I have to caution you that these applications are not money making machines. I am not suggesting that all those applications are fraud or scam. There are good programs like FAP Turbo Robot and few others. The newest entry Ivy robot also shows potential. Go through the IvyBot review & results here. Still these applications can not replace a traders skill and knowledge.
A Simple currency trading Strategy
So let us have a look at a simple currency trading strategy using what is called support and resistance. You can utilize this technique when you have a condition where the market is fluctuating up and down within definite boundaries. Hence if you look over an extensive period it is within an upper position and a lower position.
You will notice this on the forex charts which you can get access in your demo account provided by your forex broker. See the candlestick chart over a legthy time period. You should be able to identify a time when the currency price was moving up and down between certain points.
You could draw a line along the top points. This line is called the resistance line and it will be horizontal. When the price hits this line it moves down again to keep within the boundaries. So at that point you could sell the currency pair.
Similarly if you draw a horizontal line along the bottom points this is called the support line. When the price hits this line it moves up again, so you could buy at that point.
If you try this in your demo account on live prices you will find that sometimes the price does not bounce back into the zone and on those occasions you will lose. Usually this is because a trend was beginning to form. You can use the indicators in your charting software to check when a breakout like this might be expected. From this you can develop your own system based on support and resistance on the one hand and following new trends on the other.
Be sure that your system is working profitably over a long time (several months) before you start using it to trade with real money. forex trading is always risky but by testing your system in this way you can be more confident that you have created a profitable system from your forex trading strategies.