15 LESSON OF FOREX

LESSON #14:
20 pips to 200 pips: Small Trades to Big Trades and Somewhere in Between.

There are FOUR different classifications of FOREX traders in the market. Each one employing one of three different pip- trading (profit-taking) styles.

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Sidenote: remember what a "pip" is? We talked about this in Lesson #3, but for a refresher: A pip is the last number to the right in a currency quote For example: If the EUR/USD traded at 1.3335 this morning. The "5" is the pip. If it moves to 1.3435, that would be a 100-pip move.

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There are the novice traders – the rookies, the ones who don't learn from the "donkey" (see yesterday's lesson; Lesson #13).

In addition to the novice traders, there are three other levels of participation in the FOREX market: the dealers, the institutional traders, and the advanced traders.

The DEALERS are the most powerful and they make the market, setting prices and putting together deals.

The INSTITUTIONAL traders work in banks, wire firms, or government agencies. They trade huge amounts of money at a time, and the size of their trades gives them enormous power.

Next, there are the ADVANCED traders. This group is comprised of people from all across the world, sitting in smaller investment firms, offices, or even their homes. You can be a part of this group. In some cases, the ADVANCED traders are the smartest group – trade for trade – than any other group. Because they don't move a lot of money on each trade, they don't have as much power as the institutional players. Because their trades are brokered by the dealers, they'll never have absolute trading power. But, because there are so many novice traders – the advanced traders have plenty of people that they can outrun.

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Each of these different traders have different philosophies about how many pips to go after.

(1) Some traders go after large pip targets -- from 50 to 500 (or more). They are often position traders, leaving trades overnight - often for days. Usually they trade one or two lots and use stops of around 50 to 100 pips.

(2) You have other traders that focus on daytrading (getting in and out of a trade within one day, usually though within hours) to get 10 to 20 pips trading one to a few lots.

(3) You also have another breed of trader that will trade multiple lots to catch just 5 to 10 pips, usually within minutes. For instance, trading 10 lots for 10 pips is an equal profit to someone trading 1 lot for 100 pips. Both would equal $1,000 profit, depending on which currency pair was traded and assuming they were on a standard 100K account (i.e., using 100:1 margin or putting up $1,000 to trade $100,000 worth of currency). Traders who attempt to trim off profits, within minutes, are usually called "Scalpers."

There is nothing wrong with trading with any of these objectives in mind. In fact, it is good to be versatile in your trading. They each have their pros and cons but, if somebody gets consistent profits (more winners than losers) with one or the other, then that one strategy should be considered GOOD.

As you progress from ROOKIE to ADVANCED trader you will figure out your personal preference and tolerance for risk.

Most of the courses we have for sale at RapidForex.com (especially the "Forex Surfing" course) teach you to shoot for 10 to 20 pips PER TRADE. It's as simple as this: We don't try to make a ton of money on each trade (excessive GREED), we never try to get revenge (a lot of traders get creamed in the market and then want to strike back. So they double their last order and go for broke) and we're not scalpers (someone who sits and makes 20-second trades for a few pips at a time).

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Yes, You can Replace Your Full-time Income and Make Over 5-figures a Month On Just 10 to 20 pips Per Trade

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Generally, the larger the pip target you are shooting for the greater will be the chance that the market will turn around on you before it reaches your target. Conversely, the smaller the pip target you are shooting for the greater will be the chance of the market reaching your target.

All things considered equal, there is a greater chance that you'll successfully pull 10-20 pips out of the market than 50 pips, or even 30 pips. The further out you go the more likely it becomes that the market will change its mind.

In our "Forex Surfing" course we give you many ideas and trading techniques to consistently capture 10 to 20 pips per trade, per day. And, once you get good at doing that, then the sky's the limit. We teach you how to compound your gains, scale in and out of trades and a lot of other ways to trade like the Traders who shoot for 40 pips per trade, but without all the risk