Pip Value And Stop Loss Size
Unless you are trading CFDs, pip value will actually be changing as it is a function of the underlying exchange rate, all spot forex brokers do this because that’s the way they have to price the market. Pip value is not of great importance unless one is implementing very accurate trades, where exact profit/loss figures need to be known in advance, for the purpose of hedging. Some traders go as far as using binary options to hedge their spot forex trades, or to simply evaluate the probability of a spot forex trade winning, by watching the payouts on a binary option.
There are several great binary option brokers to use for this, Olymp Trade review ratings for example are among the best in the industry, as this broker offers great value and fair payouts. If you lack confidence in predicting market direction, the payout of a binary option can be the simplest indicator you can use. Simply watch the payout of even a demo binary trade, and think of it as the probability gauge for your real open spot forex trade, then manage risk and reward accordingly. Binary pricing is not perfect, nor is it a crystal ball, but in short term trading it can tell you, early enough, whether a spot forex trade will make money or not.
Do use variable stop loss orders, and use the Parabolic SAR indicator to find levels to place these stop loss orders every time. Using fixed size stop loss orders is counterproductive and total nonsense. Forex trading can be seriously improved through the use of such dynamic risk control.
The established daily trend of a currency pair is not going to change because of these news, and even when it does finally change, it will do so over several days, giving off enough advance signals.
News only helps create volatility, especially economic report announcements tend to create absence of volatility just before they are made, and a lot of volatility right after they are made. It makes no sense to try and interpret these reports, rather it makes sense to treat these reports as volatility-causing effects and nothing more. Currency pairs tend to be volatile on news announcements, and this volatility can often be traded in both directions, through CFDs, spot trades or through binary options. The approach to trading such days is much easier than you think. There are articles on this and other related issues on the Investor Greg website, worth reading, the more you can read about realistic forex trading the more it help you avoid making silly trading mistakes. Even many classic trading tips are totally false, or simply no longer relevant to today’s markets. New traders have to be careful as to how they use such classic trading tips. Think of the old tip which says ‘cut your losses short and let your profits run’ and how naïve and nonsensical it really is. Since it doesn’t tell you how to really identify losses and profits in the fist place. So you can use critical thinking to get around such vague and false tips.
You can read full story here – Basic knowledge and Skills Useful for Forex Trading
