Trading Journal: Pips and Pip Hunting
I am in the process of putting most of my capital into cryptocurrency. After having some success on Poloniex and discovering the volume and volatility of the forex markets, my interest was piqued. Then I learned that I could trade forex with bitcoin on 1broker.com* through @fyrstikken on SteemSpeak.com. This is preferable to me because when I'm not in a trade my money is in bitcoin and this was a big factor in me deciding to use 1broker.
I have decided to master the art of forex trading and blog about my experience on Steemit as I learn. The first thing I noticed was the big volume and volatility. As a trader those are the things I am looking for. I have also noticed that I can be leveraged 200x on some currency pairs on 1broker including USD/CAD, USD/JPY, EUR/USD, and EUR/JPY.
Pips and Pip Hunting
What is a pip?
Pip stands for Point in percentage. It is basically the smallest unit of value that can be used to quantify losses and gains when trading. Usually this the fourth decimal place. The exception to this is the Japanese Yen (JPY) which is only measured to the second decimal place. Some brokers, including 1broker calculate JPY currency pairs to fractions of a pip to give 3 decimal places.
Pip hunting is making trades on very short time frame that just earn a few pips. This is also called scalping. Traders who trade like this are considered market takers as opposed to market makers. Most brokers are prepared for this type of trader so most of them allow it without penalty. There is a good article listed in the sources below in which a trader emailed several exchanges asking what their policy was on pip hunting. Spoiler - They all said they were fine with it.
Learning To Trade Forex
When I first opened my 1broker account, I knew that I needed to set stop losses, but quickly learned I was setting them a bit too close. because of the volatility of forex, I have changed my strategy to allow for more volatility because even when I was right about the overall trend the tight stop losses caused me to lose out on my first few trades because the volatility caused the price to hit my stop loss before it hit my take profit.
I am learning something new everyday right now so I expect to post regularly as I continue to learn. Thanks for reading and if you have any questions or thoughts please share them in the comments. I will reply to every question and encourage you to share any information or knowledge you have on the topic of trading.
Sources:
https://www.dailyfx.com/forex/education/trading_tips/post_of_the_day/2013/12/31/What_is_a_pip.html
http://forex-strategies-revealed.com/brokers-allowing-scalping
I trust you will not object to my reference to your article in a new post I just made: https://steemit.com/steem/@ebryans/steemit-when-is-the-first-steem-avatar-game-out
Cool! Thanks for the mention!
interesting
never heard about this one.
will follow your experience
Very interesting space right now with the EU so anti and African nations seeking access to anything liquid - am still feeling that US is over cooked and gold is under but ...resteemed as well as a vote - fly!
Agreed! and thank you!
Good luck. I quite like the idea of trading from a Bitcoin based account.
It will take some time to work out what your psychology is. Mine - I have to be right. Forex is tough because you can make money being right 50% of the time, which means that you are WRONG 50% of the time. My brain cannot hack that. That is why I have spent quite some time finding root ways of trading - robots have no emotions.
Thank you. It will take time. I've thought about trying to use bots for that exact reason, but haven't just because it seems daunting because I don't know much about coding.
No coding required to setup a trading bot. What is required is a strong understanding of FX markets and a solid approach to backtesting and live (forward) testing. I found in all the FX stuff is there is a right time to learn new things - that time will come especially if you are disciplined on conserving your capital.
Thanks @carrinm! I have a lot to learn!