Forex Trading Chain Tutorial: Part-2

Pips and Pipettes


Pips:

Forex market the currency pair to the number of decimal places after the 4th one single change or movement called the PIP or pipa. PIPS pips or plural form of the PIP,such as Market has changed 120 pips today. In other words, the market has changed today 120 pips. Many of the points and the pips. However, the most widely used internationally pips.
What is pips, most people spend a lot of time knowing it. Let’s see if we can learn anything from the simple example.
1st example:
You open your terminals (provided by your broker to trade software). Saw, EUR / USD was 1.4340, and 1.4345 now. How many pips is changing?
To rule out this, high-low = 1.434 5 – 340 1.4 = 0.0005
I said pips is calculated the number of decimal places to number four. Forget the decimal,Let’s do some easy calculation:
435-4380 = 5
In other words, the market has changed to 5 pips.
Now tell me then,
2nd example:
GBB / USD 1.5630 to 1.5639. How did the market pips move?
5639-5630 = 9 pips.

More:

Market Movement (EUR / USD)

Was 1.3450, today 13432 = 3450 – 3432 = 18 pips Market Movement

Was 1.3450, today 1.3550 = 3550 – 3450 = 100 pips movement in the market

Was 1.3750, today 13432 = 3750 – 3432 = 318 pips movement in the market

Was 1.4450, currently 1.3450 = 4450 – 3450 = 1000 pips Market Movement
Hope you have understand.

Why it is necessary having clear concept on pips?


Forex market movement is calculated on pips. You Often hear the Euro / USD today rose 200 pips. The move to market increased by 100 pips in 5 minutes.

Pipettes:

Some broker price of 5 digits after the decimal places. For example, 1.42561. The fifth digit is pipette. So if price from 1.42561 to 1.42667, then to be understood 10 pips 6 pipettes or 106 pipetisa has changed.

Lot size or volume


Lot is very easier. But when you go as a unit, then you have to be complicated. So here we do not calculate as a unit, but we will try to convince.
We can learn from each pip movement in the Forex market. 1.1720 from 1.1710 at the price of 10 pips in the profit or loss will be. Lot / volume pips in our favor that we’ll determine what the amount of the gain or loss will be, or to the contrary.

We’re divided into 3 for the benefit of Forex brokers:

  • Standard lot Broker
  • Mini broker lot
  • Micro broker lot

Standard lot broker 1 lot = $ 10 / pips. But the mini-lot broker 1 lot = $ 1 / pip. The micro lot broker 10 lot = $ 1 / pip. So, if you have 1 standard lot broker with a lot of open trade and 10 pips in your favor, then your profit is $ 10×10 = $ 100. Although similar to Loss would be $ 100.
However, if you broker 1 mini lot with a lot of open trade and 10 pips in your favor, then your profit is $ 1×10 = $ 10. Although similar to Loss would be $ 10.
And, if you are 1 of micro broker with a lot of open trade and 10 pips in your favor, then your profit is $ 0.1×10 = $ 1. Even $ 1 will be similar to Loss.

Standard lot Broker:

1 standard lot = $ 10 / pip
0.1 standard lot = $ 1 / pip
0.01 standard lot = $ 0.10 / pip
10 standard lot = $ 100 / pips

Mini lot Broker:

1 mini lot = $ 1 / pip
0.1 mini lot = $ 0.10 / pip
Mini Lot 0.01 = $ 0.01 / pip
10 mini lot = $ 10 / pip

Micro lot Broker:

1 micro lot = $ 0.10 / pip
0.1 micro lot = $ 0.01 / pip
0.01 micro lot = $ 0.001 / pip
10 Micro lot = $ 1 / pip

Indeed, hope you understood, the difference between standard, mini and micro lots. Just as the benefits of our trading lot size.
The broker will give you a minimum 0.01 late trade. In other words, the standard lot Broker Pip Value You can take a minimum of 10 cents. The mini lot Broker Pip Value, you can pick up 1 cent minimum. The micro lot Broker Pip Value You can take a minimum of 0.1 cents. So if your capital is low, then the mini lot or micro lot broker you can trade with less risk. Just in 1 lot, 0.1 lot, or 0.01 lot trade can not be so, if you want .5 lot, 1.3 lot can happen custom lot trade.

How do I know my broker is micro, mini or standard?

On Trading Point Micro account, you can trade micro lots. Insta Forex, HotForex, lightForex etc are the mini-lot broker. FBS,FX optimax are standard lot Broker. If you do not know your broker micro lot , mini lot or standard lot, Go to the broker live support and ask questions.Sometimes it shows on their website. Or you can Open a demo account with them or with a lot of open trade. If you see that $ 10 dollars per pip gain or loss is the change of the standard lot. And if you see that $ 1 dollar change, then it is mini lot broker. If there is change in 10 cents it is micro lot broker.

Time frame


We have a specific timeframe of 5 minutes, 15 minutes, 1 hour, 1 week or 1 month, the maximum price increased or declined as we know. 1 If we look at the 5 minute candles, we understand it :

  • What price has started candles
  • What price has been closed candles
  • Increase the maximum price in 5 minutes
  • What is the minimum price declined in 5 minutes

This following Time frames are generally mostly used because they have been in MetaTrader 4. But the MetaTrader 5 you can also use custom timeframe.

  • M1
  • M5
  • M15
  • M30
  • H1
  • H4
  • D1
  • W1
  • MN

Specific timeframe in which 1 candles and you will know at that time what was the price movement.

 

Forex graph
Forex graph

Selected by candles with red spots. It is understood that 4 hour price action.

Which time frame I will trade?


It depends on what you want to trade. However, should you prefer Scalping M1, M5 or M15 to trade. If you want to make general or a long-term trade, then M30, H1 or H4 you should trade. If you are interested in swing or position trade your week or month should be analyzed.

Spreads, Stop loss and Take profit

Spreads:

When you open a trade you will see a little bit loss will open trade. This is what is called the spread. Forex broker to open a trade takes a cut of the fee as a commission or charge. Suppose you buy GBPUSD at 1.7445, but it will open the 3 pips at 1.7449 fees have been applied. If you have $ 1 pip value of open trade if the trade is $ 3 loss will open.

forex bid
Forex bid

Stop Loss and Take Profit:

The stop loss: The stop loss on your loss trade at a price you can decide whether you want to stop.
Take profit: Profit gain from the trade you want to disable any price you can fix it.
For example, you open the trade was a buy at 1.3540. If you want to gain 50 pips and not loss than 50 pips .You can be set 50 pips stop loss and take profit of 50 pips. If your computer is off or sudden price increase or decrease as a result of the Spike, take profit or stop loss price will be automatically close your trade.

What is leverage?


Leverage or margin loan is how many times your capital over the maximum loan to pay your forex broker.
For example, your balance or capital is $ 100 . If you are 1:200 leverage use, when you trade your broker will loan you up to 200 times. Now it’s up to you how you spend the loan amount. Thus, the 10×200 = 2000$ you can trade.

So …. if you get a good loan up to 200 times, then why do not you take? The stock market do not want to give 1:2 loan!

For example, you deposit $ 10, he decided not to use the leverage of 1: 1, meaning do not take any loan. In that case, the broker will not allow you to open any trade large size. The large open trade can be as much as 10 dollars, just as much as it will open trade. In that case, the market will move 50 pips in your favor that you will gain 1 dollar. Generally, for every different currency pairs move 100-300 pips.

So you thought that the loan would not open trade and greater profits are higher. If a broker to 1:200 leverage offer, then if you wish, you can trade 10 dollars to 2000 dollars. And so, before which it was received, will be 200 times more than now. Similarly, the loss would have been before, you are 1:200 full use of leverage, the loss will be more than 200 times. If the market 50 pips move in your favor if you would have received $ 1, so it will be 200 dollars.
The broker will loan you.To gain fine,if your loss of your capital loss is equal to at any time, then it will automatically close your trade. more than loss in the capital Broker will not go on your trade. There’s this Forex Margin Call.

If I use leverage as loss is equal to capital , then it will go bankrupt?

Yes.off course! Why not set the leverage, the balance of trade opening ever larger proportion of the trade is open. Some people say that Forex Capital can possible two or three times in a day,if luck favor then possible. But do not take this type of risk.

Thanks to all. This is chain tutorial’s 2nd post. For next post keep in touch. Email: mbrur75@gmail.com

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