Barely anyone goes anywhere in the forex market without a solid share of the technical jargon required. Before trying live trading, forex beginners first have to understand two very big niches in forex world namely – what is MT5 trading platform and pips meaning.

MetaTrader 5 or MT5 in short is still the most popular and used trading software around the globe while pips or percentage in point are the standard units in trading meaning one point move in the last decimal of a currency’s price.

On the whole, knowing and using the terms that are quite technical and sound foreign to some traders when heard for the first time, will be a leap towards having better trade executions, manage risk in a more effective way, and build discipline.

Without first understanding the basics, it is really a pity that most beginners end up making emotional decisions and losing even the minimal balance in the forex market.

WHAT IS MT5 TRADING PLATFORM

What is MT5 trading platform is definitely one of the most asked questions by new traders when they decide to start forex trading.

MetaTrader 5 trading platform or MT5 for short is a technical and professional software trading platform that can be used for trading forex, commodities, indices, stocks, and other financial products.

The platform offers traders the opportunity to perform technical analysis on different timeframes, price monitoring and trading through one single window for execution purposes.

Moreover, one of the reasons MT5 is well liked is that it features an updated and advanced set of charting tools, supports multiple timeframe analysis, has a wide array of technical indicators, and allows quick order execution.

Besides brokers, most prop trading firms also offer MT5 as their primary platform for the simple reason that it is reliable with professional and feature-rich capabilities.

WHY MT5 IS IMPORTANT FOR BEGINNERS

The main reason why MT5 is important to beginners is that it makes a big difference and gives traders everything necessary at the level of market analysis and trade management.

For instance, a beginner can definitely explore price action, bring in indicators, and perform trade execution graphically using MT5.

In addition, the platform assists traders in position management, profit and loss calculation, as well as fast and easy stop loss and take profit adjustments.

Having acquired knowledge on what is MT5 trading platform, the trader will be able to create a solid forex foundation for the future.

PIPS MEANING IN FOREX TRADING

Pips meaning is basically the one that defines the standard unit or magnitude of price change in forex.

In most currency pairs, a pip is the fourth decimal digit.

For instance, in the case of EUR/USD exchange rate, if it changes from 1.1000 to 1.1010, it means that the pair has moved 10 pips.

As a trader, you will periodically use pips to count profits and losses. Besides that, pips will come handy when determining stop loss and take profit levels.

A trader who doesn’t understand pips meaning is like a blindfolded moving across a dangerous market.

WHY PIPS ARE ESSENTIAL FOR TRADE EXECUTION

Only a very few traders can structure their trade execution without the help of the pips understanding.

Since every trading step starts with planning of entries, stop losses, and profits, measures of pip distance are typically used.

In practice, a trader may accept a loss of 20 pips in order to gain 40 pips.

With this method, risk-to-reward ratio is clearly defined and one is able to make better and wiser decisions.

Most importantly, pips meaning gives traders leverage in preventing unnecessary emotions during the course of trading by making sure that every new trade is planned with calculated ​‍​‌‍​‍‌risk.

HOW​‍​‌‍​‍‌ MT5 SHOWS PIP MOVEMENT

One of the great functions of MT5 is that it enables traders to track pip movement in real-time directly on the charts.

After entering the trades, traders can view the exact number of pips the market has moved which helps them in trade management.

Additionally, the platform provides knives measure the distance between two points on the chart in pips.

HOW MT5 CAN HELP YOU EXECUTE YOUR TRADES BETTER

Trade execution is a term that generally covers the entire process of entering, managing, and exiting the trades.

MT5 is a great help when it comes to trade execution as it has queueing and re-quotes modes of order processing besides a wide range of order types.

Traders can execute different types of orders (e.g. market, limit, stop, pending) with the platform.

Moreover, a trader can adjust the stop loss and take profit levels based on pip calculations.

Hence, a deep understanding of MT5 and the role of pips is crucial in a systematic trading environment.

MARKET RISKS AND PIP CALCULATIONS

Managing risks is the number one factor that determines a trader’s success in the forex market.

The concept of pips can be used to figure out the level of risk of a trade.

Let’s say a trader has a risk appetite of 15 pips and is adjusting the size of their position accordingly. In that case, they can maintain their risk exposure almost the same even when the market becomes volatile.

Any trader who does not understand the concept of pips might risk a lot of money in a trade unintentionally.

The traders who are dependent on the forex market for their livelihood rigorously use pip-based risk management to achieve consistent performance.

HOW TO PRACTICE WITH MT5

Many beginners use MT5 demo accounts as their first step in getting to know the platform.

This way, they can simulate the whole trading process, from making orders to analyzing charts and calculating pips without using real money.

Learning about a trading platform is easier when a trader consistently practices through simulation.

Besides, through demo accounts, MT5 beginner trading platform gets familiar with the users which increases their confidence and discipline in trading.

NEWBIE PITFALLS THAT LEAD TO FAILURE

Confusing pip movement with lot size and account risk is one of the very common mistakes of new traders.

Without calculating the proper position size, some traders think that trade risk is low just because pip distance is small.

Another reason of failure is the use of MT5 without a proper knowledge of the features of the platform.

Starting to trade without knowing market structure, setting stop losses properly, executing trades correctly are some of the things that beginners do that lead to failure.

By learning pips meaning and MT5 fundamentals help traders avoid these early mistakes.

REASONS TO INVEST IN EDUCATION FOR FOREX TRADING

Trading in forex market is quite challenging and requires patience, education, and discipline.

Many traders fail simply because they start live trading without getting a firm grasp of fundamentals like pips and platform features.

By learning not only what is MT5 trading platform but also pips meaning and getting a thorough understanding of the latter a stronger base for further growth can be created.

Traders having a professional approach take time to gain knowledge first and only then do they focus heavily on making profits.

Conclusion

Knowing what is MT5 trading platform and how pips work is a must if you want to optimize your trade execution and be consistent in your trading in a long run.

The MT5 platform caters for needs of the modern trader as far as analysis, order-making, and market tracking are concerned while pips serve to measure market movement and risk management.

In fact, these two components can be regarded as the backbone of professional forex trading.

Along learning to use MT5 properly, grasping the concept of pip-based risk management goes a long way in helping beginners to get discipline, confidence, and overall better trading ​‍​‌‍​‍‌results.