The 50 pips a day forex strategy was developed to trade some of the major currency pairs. Traders use this technique to spot the early market move of the trading instrument. As a rule, the strategy mainly applies to EUR/USD or GBP/USD. However, you are free to make experiments in an effort to integrate it with other traded assets.
The main benefit for beginners is the fact that Forex trading 50 pips do not require in-depth research or market analysis. It is very simple to uptake although you are still supposed to understand how various indicators work as well as how to read different trading charts or patterns.
Getting started with the 50 pips a day forex strategy
The first thing you need to know before setting up the 50 pips a day trading strategy is the fact that it was developed for day traders. If you were a swing trader, you would rather prefer using in-depth technical analysis with oscillators and other indicators that ensure a clear vision of the market moves in the long run instead of shirt timeframes.
As mentioned earlier, beginners will not need complex indicators or price patterns to use the strategy. On the other hand, baseline risk-management tools will come in handy. We will discuss them a bit further. While we are talking of major currency pairs to trade, the steps to get started are as follows:
Open the daily chart.
Look for the currency pair with a good daily range.
3. Capture 1/3-1/2 of the daily range for a chosen currency pair.
Setting up the 50 pips strategy
To make things easier for you and save your time, we will indicate all the major things you will need to configure your trading tactics. With this particular strategy, you should use the 7 a.m. GMT candlestick that is plotted on the 1-hour Forex trading chart. Do not forget to specify the correct time zone depending on your location.
Forex trading 50 pips does not require Forex indicators, as it mainly refers to price action tactics. They have nothing to deal with indicators.
The 1-hour chart is the general timeframe to use. However, you may opt for other ones depending on your location and time zone.
The strategy works mainly for major currency pairs like GBP/USD or EUR/USD. These are the best ones to start with. Later, you can experiment with other pairs as well.
Essential Rules when using the 50 pips a day strategy
Now when we have everything needed for the 50 pips a day Forex trading strategy, we can actually start trading. To make the most of the tactics, traders should keep in mind several essential rules that refer to a chosen technique. Here are some of the most important ones:
Wait for 7 a.m. GMT candlestick to close and immediately open buy stop order (2 pips above the high) and sell stop orders (2 pips below the low).
The price will move towards high or low and activate one of the pending orders. Then, you may cancel the another order.
To manage risks, use a stop-loss order placed from 5 to 10 pips above the high or low of the candlestick. Traders may increase or decrease the distance to the stop-loss depending on the candlestick length.
The profit target should be set to 50 pips.
Repeat the process the next day.
If your trades bring you to profit steadily, you can use the strategy each day. However, if the results are floating, you need to exit the trade by the end of the day.
Risk-management for forex trading 50 pips a day
The strategy is not as flexible as some may think. It was initially designed for day trading. It means that swing traders will hardly benefit from this antique. They are supposed to use technical indicators and analysis instead. To reduce the potential risk, using stop-loss orders is definitely a good idea.
This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.
To implement the 50 pips a day strategy, traders usually set a profit target of 50 pips and a stop loss to limit potential losses. They carefully monitor the market and open positions when they believe there is a high probability of achieving the target profit.
To implement the 50 pips a day strategy, traders usually set a profit target of 50 pips and a stop loss to limit potential losses. They carefully monitor the market and open positions when they believe there is a high probability of achieving the target profit.
The numbers five, three, and one stand for: Five currency pairs to learn and trade. Three strategies to become an expert on and use with your trades. One time to trade, the same time every day.
Forex traders can execute as many day trades as they want without being restricted by the PDT rule. That being said, forex traders should be aware of other regulations and restrictions that may apply to their trading activities, such as leverage limits and margin requirements.
However, during periods of high volatility, such as economic crises or geopolitical tensions, the pair can experience larger movements, exceeding 100 pips per day and the monthly range can expand to exceed 1000 pips.
Essential Rules when using the 50 pips a day strategy
Wait for 7 a.m. GMT candlestick to close and immediately open buy stop order (2 pips above the high) and sell stop orders (2 pips below the low). The price will move towards high or low and activate one of the pending orders. Then, you may cancel the another order.
However, most experts agree that between 1 to 10 pips per day is a reasonable goal for most traders. As for trading 0.05 lots per every 100 dollars capital, this is generally considered to be a safe amount. This is because it allows for proper risk management while still providing a good opportunity for profit.
It goes along the lines, 90% of traders lose 90% of their money in the first 90 days. If you're reading this then you're probably in one of those 90's... Make no mistake, the entire industry is set up that way to achieve exactly that, 90-90-90.
The golden rule of Stop Losses is that they should never be moved away from the market once the trade is opened. If a trader feels that their stop loss is incorrectly placed, they are recognising that the foundations of their trade are incorrect and therefore they should close out.
Forex options and futures contracts are considered IRC Section 1256 contracts for tax purposes. This means they are subject to a 60/40 tax consideration. In other words, 60% of gains or losses are counted as long-term capital gains or losses, and the remaining 40% is counted as short-term.
PDT Rule. Any US-based prospective day trader quickly learns about the dreaded pattern day trader (PDT) rule. The PDT essentially states that traders with less than $25,000 in their margin account cannot make more than three day trades in a rolling five day period.
The 3–5–7 rule in trading is a risk management principle that suggests allocating a certain percentage of your trading capital to different trades based on their risk levels.
For example, if you are trading one standard lot of EUR/USD, then a movement of 50 pips is worth $50. This is because each pip is worth $0.10 for a standard lot of EUR/USD. Similarly, if you are trading one mini lot of EUR/USD, then a movement of 50 pips is worth $5, and for one micro lot, it is worth $0.50.
There are definitely profits to be had trading 50 pips a day. Basically, every successful trade will grant you a profit of 50 pips, which stands for percentage in point. 50 pips is equal to $0.0050—but that can add up fast! Say you enter GBP/USD long at 1.6400.
In conclusion, making 20 pips a day in forex is possible, but it requires a sound trading strategy, discipline, and risk management. Traders need to choose the right currency pairs, use a suitable trading strategy, and stay disciplined to achieve this goal consistently.
In conclusion, making 20 pips a day in forex is possible, but it requires a sound trading strategy, discipline, and risk management. Traders need to choose the right currency pairs, use a suitable trading strategy, and stay disciplined to achieve this goal consistently.
How much is 50 pips or 100 pips? A pip usually equals 0.0001 of a Forex pair, so 50 pips equals 0.005, 100 pips—0.01. If one pip is worth $5, 50 pips are worth $250, 100 pips—$500.
Instead, we wait until the price moves up in a correction to reach at least the middle point between the two EMAs. Now we place a sell order. The stop loss should be placed 15-20 pips above the sell order level. The take profit is 30-40 pips.
If you want to focus on making 100 pips a day in forex, you will need to adjust your risk-reward ratio and use stop-loss orders to manage your losses. Always ensure you are trading with capital you can afford to lose and always risk a limited percentage of your capital on each trade.
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