Forex Market Trading - Market Profits

Market Profits Picture
In the Forex market trading, market profits are measured in points or pips. The pip (short for Price Interest Point) is the smallest unit of currency Forex. For each currency, the value of a pip equals 0.0001 of the unit price of the currency, except the Japanese Yen, that as 2 tenths of a currency, the pip is equivalent to 0.01 of the unit price of the currency.

Considering that the coins are operated in large batches of $ 100,000 for example, the value of small movements can lead to significant gains or losses. In a batch of $ 100,000, one pip equals $ 10, so that an increase of 40 pips can generate a gain or loss of $ 400 (USD).

A mini lot is 10,000 units, where pip is worth $ 1, but most transactions are executed using the standard batch. Considering these daily fluctuations, it is useful to know the percentage of successful transactions in the history of the trader and know the ratio between gains and losses.

Not much use to a trader with a high percentage of successful transactions generate profits if these very small in relation to the losses. For example, if we have 70% of successful transactions with an average gain of 10 pips per transaction and the remaining 30% of transactions generating losses averaging 30 pips per transaction (ratio 0,33:1), then you get negative results end of the month. If on the other hand we have a positive ratio of 2:1 and only 40% of successful transactions, means that the result would be generated at the positive end of the month.

However, the ideal is to find a trader whose ratio between gains and losses is on average higher than 1,2:1 whilst the percentage of successful transactions exceeds 53%. With a moderate leverage, and higher these two variables are, the greater the probability of generating profits every month.

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