In forex trading, a "pip" stands for "percentage in point" and it is a unit of measurement for the change in value between two currencies.

Some traders may use the term "pip hunting" to describe a strategy where they are actively seeking to profit from small price movements, often just a few pips at a time.

Pip hunting can be a relatively difficult strategy when done without the help of relevant software, such as Expert Advisors and trading bots. 

Furthermore, pip hunting can only be a viable strategy for currency pairs that are characterized by high liquidity, such as major pairs. 

Pip Hunting And Scalping

Scalping is the primary method of pip hunting on the forex market. Scalping is done by traders who look for incremental price movements caused by increased volatility and aim to generate a profit of a few pips per trade which adds up over time. 

This strategy typically involves making a large number of trades throughout the day and holding positions for only a few seconds to a few minutes.

To better illustrate how scalping strategies work in pip hunting, let’s look at an example. 

Let’s assume that the EUR/USD pair was trading at 1.0647 and a sudden volatility spike sends the pair to 1.0650. Considering that the EUR/USD pair is a highly liquid one, scalpers could buy at 1.0647 and set a sell limit order at 1.0650, netting a profit of 3 pips. 

Multiple such trades per session can add up over time and lead to substantial profits for the trader. 

Pip hunting is a strategy that comes with its own fair share of advantages and disadvantages and traders should carefully consider these factors to decide whether pip hunting is the right course of action for their financial objectives. 

Pros

• Quick Profits: Scalping can yield relatively quick profits due to its focus on capturing small price movements. Traders can accumulate gains throughout the trading day
• Reduced Exposure to Market Risk: Since scalpers hold positions for only a short time, they are less exposed to the risks associated with longer-term market fluctuations, economic events, or news releases
• High Trading Activity: Scalping provides excitement for traders who enjoy active, high-frequency trading. It can be engaging and keeps traders focused on the market

Cons

• High Transaction Costs: Frequent trading and the need for tight spreads can result in high transaction costs, including spreads, commissions, and other fees, which can eat into profits
• Stress and Emotional Strain: Scalping requires quick decision-making and can be emotionally taxing. The pressure to make rapid decisions and manage multiple trades simultaneously can lead to stress and impulsive actions
• Limited Profit Potential: While the quick profits can be a pro, they can also be a con. The small size of gains per trade means that a significant number of successful trades are needed to make substantial profits, and losses can easily offset gains

• Pip hunting is a strategy that is used interchangeably with scalping in forex trading
• When traders are pip hunting, they are seeking to profit from incremental price movements of their asset of choice
• Pip hunting can be a risky trading strategy that relies on high liquidity on the market and is typically applicable to major currency pairs, such as the EUR/USD
• Pip trading is a colloquial term used to describe various scalping strategies that generate profits of a coup of pips per trade