Many traders get confused about points and pips in MT4. Some think they are the same, but they are not. Understanding what is 50 points in MT4 is important for setting stop-loss, take-profit, and calculating risk properly.
In this guide, we will explain what 50 points mean in MT4, how it compares to pips, and why it matters in trading.
What Does 50 Points Mean in MT4?
In MetaTrader 4 (MT4), points and pips are different. One pip equals ten points in most forex pairs. That means 50 points is equal to 5 pips. However, for JPY pairs, where one pip equals 100 points, 50 points is only 0.5 pips.
For example, if EUR/USD moves from 1.10000 to 1.10050, that is 50 points or 5 pips. If USD/JPY moves from 130.500 to 130.505, that is 50 points or 0.5 pips. The way points and pips are calculated depends on the number of decimal places used in the currency pair.
Why Do Brokers Show Points and Pips Differently?
Some brokers use points instead of pips when displaying spreads and price movements. Others show pips clearly, which can confuse new traders. If a broker says the spread is 30 points, that means 3 pips. If a broker says a price moved 100 points, that means 10 pips.
Knowing how your broker displays prices can help you avoid misreading charts and making incorrect trades. Some traders assume points and pips are the same and end up setting the wrong stop-loss or take-profit levels.
How 50 Points Affects Your Trade
Let’s look at an example to see how 50 points changes profit or loss.
If a trader buys EUR/USD at 1.10000 and sells at 1.10050, the price moved 50 points, which is 5 pips. If the trader used one standard lot (100,000 units), the 5-pip movement would result in a $50 profit.
If a trader buys USD/JPY at 130.500 and sells at 130.505, the price moved 50 points, which is only 0.5 pips. If the trader used one standard lot, the 0.5 pip movement would result in a $5 profit.
The value of 50 points depends on the currency pair and lot size. This is why traders must always check how their broker calculates spreads and trade values.
Why Understanding Points Matters in Trading
Knowing what 50 points are in MT4 is important for multiple reasons. First, it helps traders set stop-loss and take-profit correctly. If a trader sets a stop-loss at 50 points, thinking it is 50 pips, they could risk too much.
Second, it helps traders understand spreads. If a broker says the spread is 30 points, it means 3 pips, which affects trading costs.
Finally, it helps traders calculate risk properly. Mistaking points for pips can lead to wrong risk calculations and bad trades.
Traders who fail to understand the difference between points and pips may enter or exit trades at the wrong levels. This can lead to unnecessary losses or missed profit opportunities.
How to Avoid Confusion in MT4
To avoid mistakes when trading, traders should check the decimal places of the currency pair. Most pairs have five decimal places, but JPY pairs have only three. Using a pip calculator is another way to confirm trade values. Many brokers provide pip calculators to help traders measure their expected profit and loss.
It is also important to check how a broker’s platform displays prices. Some brokers list spreads in points, while others show them in pips. Before placing trades, traders should look at the broker’s pricing format and adjust their stop-loss and take-profit levels accordingly. Some traders change MT4 settings to display pips instead of points for clarity.
How Points and Pips Affect Different Trading Strategies
Understanding the difference between points and pips is important for all traders. However, the way it impacts trading depends on the strategy used. Some traders rely on small price changes, while others hold trades for longer periods.
Scalping and Day Trading
- Scalpers and day traders look for small price movements to make quick profits.
- Since they trade on lower timeframes, even 50 points (5 pips) can be a big move.
- Mistaking points for pips can lead to placing incorrect stop-loss or take-profit orders, affecting profitability.
- Brokers like Defcofx, with low spreads and fast execution, are better suited for scalping strategies.
Swing and Position Trading
- Swing traders hold trades for several days or weeks, aiming for larger price moves.
- For them, 50 points may not be significant, as they usually target 50-200 pips or more.
- These traders focus on trend direction, support and resistance levels, and market sentiment rather than small price fluctuations.
For traders using any strategy, knowing how points and pips work in MT4 is key to placing correct orders, managing risk, and maximizing profits.
Common Mistakes Traders Make with Points and Pips
Many new traders confuse points and pips, leading to errors in their trading. Here are some of the most common mistakes and how to avoid them.
Setting Incorrect Stop-Loss or Take-Profit Levels
- Some traders place a stop-loss of 50 points, thinking it is 50 pips, which results in a much smaller stop-loss than planned.
- This can lead to trades closing too early due to small price fluctuations.
- Always check if the platform displays values in points or pips before setting your stop loss.
Misunderstanding Spreads and Trading Costs
- Some brokers list spreads in points instead of pips, making the spread appear smaller.
- If a trader sees a 30-point spread, they might think it is 3 points, when it is actually 3 pips.
- This can result in higher trading costs than expected, especially in scalping.
Incorrect Lot Size Calculations
- If a trader thinks 50 points is 50 pips, they might expect higher profits or losses than they actually get.
- This miscalculation can lead to poor risk management and unexpected losses.
- Using a pip calculator before entering a trade helps ensure correct lot sizing.
By avoiding these mistakes and using a reliable broker like Defcofx, traders can execute trades accurately, control risks better, and improve their overall trading success.
Why Trade Forex with Defcofx?
Choosing the right broker helps traders avoid trading mistakes. Defcofx offers up to 1:2000 leverage for flexible trading, making it easier to trade larger positions with less capital. Traders also benefit from a 40% welcome bonus on deposits over $1,000, which gives them more funds to trade with.
Defcofx doesn’t charge commissions or swap fees, making it a cost-effective choice for forex traders. With low spreads starting from 0.3 pips, traders can enter and exit trades with minimal costs. Fast withdrawals are another advantage, with transactions processed in just four business hours.
With Defcofx, traders can manage points and pips easily while enjoying a secure and efficient forex trading experience.
Conclusion
Understanding what 50 points is in MT4 helps traders make better decisions. Fifty points is equal to 5 pips for most forex pairs but only 0.5 pips for JPY pairs. Knowing the difference prevents mistakes in trade execution and risk management.
Traders should always check their broker’s pricing format, use pip calculators, and adjust stop-loss and take-profit levels carefully. If you’re looking for a trusted broker with low spreads and fast withdrawals, Defcofx is a great choice.
FAQs
How many pips are in 50 points in MT4?
For most forex pairs, 50 points equals 5 pips. For JPY pairs, 50 points equals 0.5 pips.
Why do some brokers use points instead of pips?
Some brokers display spreads and trade values in points, while others use pips. Traders should always check before placing trades.
How do I calculate profit from 50 points?
If trading one standard lot, 50 points in EUR/USD equals $50 profit. In USD/JPY, 50 points equals $5 profit.
What happens if I mistake points for pips?
Traders may set the wrong stop-loss or take-profit, leading to unnecessary risk and potential losses.
Can I change MT4 settings to show pips instead of points?
Some brokers allow this. If not, traders can use a pip calculator to ensure accuracy.
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