Forex Pip: How To Maximize Pips And Minimize Losses

Dec 11
10:23

2008

Edward Lomax

Edward Lomax

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A Forex Pip is the measure of success or loss in Forex trading. Find out how to maximize pips (and profits) while minimizing risk in Forex trading.

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As you'll soon learn,Forex Pip: How To Maximize Pips And Minimize Losses Articles the Forex pip can be your best friend or worst enemy. First, we'll go over what a Forex pip is exactly. Then I'll discuss what you can do to maximize pips, and your profits, while simultaneously minimizing your losses.

What Is A Forex Pip?

First thing first. What exactly is a pip? Pip stands for "percentage in point" and is the smallest price increment in forex trading. Since most major currency pairs (the Japanese Yen being an exception), are priced to 4 decimal places, the smallest change would be reflected in the last decimal point.

Basically, the Forex pip is the measuring stick for gains or losses when trading currency. Let's look at an example to get a deeper understanding of this. A currency pair of EUR/USD might be bid at 1.1815 and later offered at 1.1820. This is a spread of 5 pips. So, if you bought a certain number of Euros at the bid price, and then later sold them for the offered price, your profit would be 5 pips. (Obviously. the amount of money that you make is dictated by how much currency you bought and sold for profit.)

What The Forex Pip Means To You

Successful Forex trading occurs when you maximize your pips when you trade as much as possible. Thinking long term and logically, to be successful you need to have more pip gains than pip losses in your trading. Let's be honest, it is impossible to win every time. When everything is said and done, what you want is more pip gains than losses.

How To Maximize Pips and Minimize Losses

The perfect scenario is to buy currency at its lowest value, and then sell it once it has reached its highest value before dropping. But that is easier said than done. There are numerous and varied factors that determine the rise or fall of currency values. So, what can you do?

Many Forex Traders are turning to Automatic Forex Robots to do the trading for them. This is a great way to maximize pips, while keeping the risk in check. These computer programs or scripts stay current with what is going on in the Forex market and trade according to predetermined indicators set in the program by professionals. So, instead of trying to figure out everything for yourself and being glued to your computer 24 hours a day, from Monday to Friday, you let the automated Forex software do the trading for you.

Why I Recommend Software To Maximize Forex Pips

I already mentioned the benefit of having the software program keep track of and react to the currency market based on predetermined indicators. However, there is an even more important reason to use a Forex robot instead of doing all the trading yourself... EMOTION! Let me explain...

Forex trading is very exciting. Watching the pips go up and down, especially when real money is on the line, is quite a thrill. But you don't want emotion to guide your trading. Greed and fear are expected emotions when dealing with something as exciting and potential profitable as Forex trading. And you don't want these emotions clouding your judgement in your Forex trading. Using a computer program to do your currency trading is an excellent way to keep your trading profitable and lower risk by keeping emotion out of your trading.

It is a great feeling when you see the pips working in your favor. So if you want to maximize Forex pips and minimize losses, get a automatic Forex robot and put your trading on autopilot. It is not only a lot easier, but a lot more profitable as well.