Explained: pipsing strategy (part 1)
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Author:finance-102
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Date2023-04-17
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Forex trading is a popular way of earning money online. There are several approaches to trading in Forex, including long-term strategies, intraday trading, and pipsing. In this article, we will discuss pipsing strategies, their advantages, and drawbacks, and provide a general idea of pipsing strategies.
Forex trading is a popular way of earning money online. There are several approaches to trading in Forex, including long-term strategies, intraday trading, and pipsing. In this article, we will discuss pipsing strategies, their advantages, and drawbacks, and provide a general idea of pipsing strategies.
What is Pipsing?
Pipsing is a Forex trading strategy that involves making a profit from small price movements. Pipsing traders typically open and close multiple trades per day, with each trade lasting only a few minutes. The profit from each trade is small, but the idea is to make up for it by taking advantage of the maximum possible (technically and psychologically) number of trades. Pipsing is a rather complicated trading approach, but many novice traders practice it.
Pipsing has several advantages, including:
Compatibility with other types of strategies: Most often, traders choose intraday or long-term strategies as their main strategies. But signals for such strategies appear once in a couple of hours (on average). Pipsing on M1 in anticipation of signals on higher timeframes is an option for relaxation and entertainment. At least, this is how you need to set yourself up so that a possible momentary loss does not spoil the mood before the main trading session.
The need for minimal knowledge of theory: A deep knowledge of technical analysis is not necessary here, you simply do not have time to apply it. There are enough simple indicators you can use as auxiliary ones. Fundamental analysis will come in handy for sure. However, there is a category of traders that simply catches price fluctuations in both directions, correctly placing orders and not going into the reasons for these fluctuations.
The accumulation of experience: By practising the speed of placing orders and constantly monitoring the price movement, the trader delves deeply into the principles of his behaviour. He begins to feel it, to develop his intuition. Pipsing in Forex is not so much a method of earning as a great simulator. After passing this stage, you can switch to more complex long-term strategies, increasing the deposit and trade volumes.
Pipsing also has some drawbacks, including:
High trading costs: Since pipsing involves opening and closing multiple trades per day, the trading costs can be significant, as each trade incurs a spread and commission.
Emotional stress: Pipsing involves making quick decisions and reacting to market movements rapidly. This can lead to emotional stress and exhaustion.
Requires discipline and patience: Pipsing requires a high level of discipline and patience to be successful. You need to be able to resist the temptation to overtrade and be patient enough to wait for the right opportunities.