Let's describe it with an example, a trader bring to an end is likely for the American dollar to move higher in price. Then this same trader decides it is equivalent for going for something bigger and having risking with 40 pips, in a hope to do something specific in order to increment for reward with 80 pips. In this moment if market goes down just against this trader's plan, then then this trader will lose his 40 pips. However, if market goes higher than this trader will gain profit of 40 pips.
The American dollar has an exact term of 1.2548/27, 3 pips of area. The trader may plan to go for 1.4448. The trader will sell his bid price if he founds that the market reaches targeted point, then the trader might have to sell the his currency on bid price. To earn 50 pips, the profit level should have 1.7390. However, if market hits the trader target, then the market will have run with 60 pips. Otherwise, will have loss of 40 pips.
At this point, you have understood that it is a very good practice to in order to understand the basics of currency trading, from fundamental concepts to complex. Before planning any trade with foreign exchange market. Keep in mind that you have mastered yourself in each and every subjects containing trading logics.