50 PIPS A DAY FOREX STRATEGY - IS IT REALLY GOOD?

Jan 02, 2020
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The 50 pips a day forex strategy isn't a strategy for everyone, but it's worth a try if you want to start with money markets and make a profit of 5 to 10 pips per trade. Try doing a small calculation, with 1 standard lot, the average value of a pip is about $10. Thus, for every 5 pips of profit, the scalper can make $50 at a time. If you repeat that process 10 times a day, your earnings will be $500. Surely this is quite an impressive result worth you learning about this day trading strategy. 

50 pips a day forex strategy

Is 50 pips a day forex strategy scalping?

Indeed, 50 pips a day forex strategy can be categorized as forex scalping strategies in trading.

Scalping can be defined as a short-term trading strategy aimed at closing lots of orders from small price changes. Traders apply this technique to make from ten to hundreds of transactions a day. Scalpers believe that it is easier to capture the small movements of the prices than the big ones. Many small gains that make up during the day can become big if any and apply strict stop-loss rules.

Characteristics of scalping

Scalping is an activity that requires fast and accurate speed. In addition, to succeed requires a clear scaling strategy, scalpers must strictly follow that strategy.

Scalpers should use momentum indicators like the RSI or other MACD indicator... Also, it is advised to use indicators on price charts. Some common ones are the MA, the Bollinger bands or the pivot points. You can use them to identify support levels as well as resistance levels.

The scalping strategy like the 50 pips a day trading strategy relies heavily on the technical analysis of the traders themselves and short-term movements of the price. Because high leverage is used to improve the profit value of each trade, this strategy can be relatively risky if you don't have a good risk management plan.

Criteria for evaluating a scalping strategy

  • Simple, easy to setup, easy to observe and detect opportunities.
  • There is a clear signal input and command closing clear, easy to understand (because in a short time you will not be able to evaluate much).
  • Have a higher win rate of 50%. This means that with 10 incoming orders, assuming TP is +10 pips and SL is -10 pips, the strategy must give them more than 5 winning orders (calculated on average).

How 50 pips a day forex strategy works

To apply this scalping strategy, we need a currency pair that fluctuates greatly. GBP/JPY is a great one. It can fluctuate from 150 to 200 pips a day. Do not choose a stable pair. This strategy does not work at all when the market is flat or the trend is unclear. Now let’s see how it works:

Set up the chart:

  • Diagram: 5 minutes
  • Currency pair: GBP / JPY
  • Technical Indicators: Exponential Moving Average 25 (EMA25)
  • Sessions: London and New York

In case you're interested:

 Position trading - An excellent trading strategy in forex

Only buy orders when:

  • The EMA25 forms an angle of 30 degrees or higher.
  • Price moved above the EMA25
  • Buy now after you see the bullish pin bar ends.
  • Stop Loss: At the bottom of the pin bar at least 10 pips.
  • Profit target: 50 pips a day.

50 pips a day forex

Only place sell orders when:

  • The EMA25 forms an angle of 30 degrees or higher.
  • The price moved below the EMA25
  • Sell as soon as the bearish pin bar ends.
  • Stop Loss: At the top of the pin bar at least 10 pips.
  • Profit target: 50 pips a day.

 Now you know how to apply the 50 pips a day forex strategy. Let's give it a try to see if it can hold up to the reputation.

What is EMA?

The EMA is one of the two most popular types of Moving Average (MA) that are most commonly used.

It belongs to a group of indicators that are commonly used in technical analysis. The EMA further smooths the price line by removing random factors by taking the average of the closing price over a specified period of time.

The EMA helps us identify market trends and identify resistance and support levels.

What is pip?

After learning about this trading strategy and you're still wondering what pip means, here is the explanation:

Pip stands for "Price Interest Point", Pip is a measurement unit to show the change in value between the two currencies.

If the EUR/USD rate ranges from 1.1050 to 1.1051, then the increased value of 0.0001 USD is a pip. A pip is usually the last decimal place of a quote. Most currency pairs usually have 4 decimal places, but there are some exceptions like the Japanese Yen pair (only two decimal places).