A Simple Strategy For Forex 10 Pips a Day
What is a pip and what role does it play in the forex market? Compare this term to the use of the unit of measurement in the stock market referred to as a point. With each price levels achieved, it should be fairly easy to mathematically determine the amount of movement in a particular currency as expressed in pips.
Forex is the simultaneous buying of one currency and selling of another. Forex investors employ various analytical methods (both fundamental and technical) in an attempt to predict price movement. Thus, becoming well versed in predicting these movements allows investors to profit from well-timed transactions. Scalp trading with an automated forex trading system has both it’s advantages as well as it’s disadvantages. In EUR/USD a movement from 1.0066 to 1.0067 is one PIP, so a PIP is .0001. In USD/JPY a movement from 120.45 to 120.46 is one PIP, so a PIP is .01.
Understanding pips is extremely important as a pip denotes the smallest movement in the price of a currency and it is this movement which determines your profit or loss when closing your trading position. Supposing the rate for GBP/USD is 1.9340. This means that 1 UK Pound is worth 1.9340 US Dollars. If the market now moves 1 pip so that GBP/USD is 1.9341 then 100,000 UK Pounds will now be worth 193,410 US Dollars – a rise of $10.
On the other hand, if the price goes up to 1.2007/1.2010 and you are quoted 1.2009/1.2010, you may decide to exit. But you get filled at 1.2007, the real price, instead of 1.2009.
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