Why are pips necessary in forex trading? If the pilot in the cockpit of your Boeing 747 is ready to take off, but then looks up and sees that none of the flight instruments are working, don’t tell him to simply put his foot on the gas and fly. Without his altimeter, compass, and airspeed indicator, he may be able to bring the plane up into the air, but he’ll have difficulty keeping his path steady, turning the aircraft properly, and dealing with unexpected events along the way. Similarly, for a trader about to take off into the global forex market: It would be reckless to urge him to simply sign up for an online brokerage and start trading (which could be done quite easily). Before doing that, he needs to make sure his instruments are in good condition. This article is about one of the most important instruments in his forex trading cockpit: Pips. In forex trading, you need to be able to determine how much money you stand to earn or lose on every trade. This is the only way one is a
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