Fifty pips a day forex trading strategy is developed to trade most of the major currency pairs. Forex traders use this technique to get the early market move of the forex trading instrument. As a rule, this strategy mainly applies to EUR/USD or GBP/USD. However, you are free to do experiments to integrate it with other traded assets.
The main benefit for beginners is that Forex trading 50 pips do not require much research or market analysis. It’s very simple to uptake, although you are still supposed to understand how various indicators work and read different trading charts or patterns.
Setting up the 50 pips a day forex strategy
Before getting started with the 50 pips a day trading strategy, you need to know it was developed for forex day traders. If you were a forex swing trader, you would prefer in-depth technical analysis with some oscillators and other indicators that ensure a clear look at the market moves instead of short timeframes.
As I mentioned earlier, beginners will not need many indicators or price patterns to use this forex strategy. On the other hand, baseline risk-management forex tools will come in handy. We will talk about them a bit further. While we are talking of forex major currency pairs to trade, the steps to get started are as follows:
- Open the daily chart.
- Look for the currency pair with an excellent daily range.
- Capture 1/2-1/3 of the daily range for your currency pair.
Let’s set up the 50 pips a day forex trading strategy.
Setting up the 50 pips strategy
We will indicate all the important things you need to configure your trading tactics to make things easier and save your time. With this strategy, you should use the 7 a.m. GMT candlestick plotted on the 1-hour forex chart. Do not forget to use the correct time zone depending on your current location.
Additional things you may and may not need:
- This does not require Forex indicators, as it mainly use price action tactics. They have nothing to deal with forex indicators.
- The 1-hour forex chart is the general timeframe to use. but, you may opt for other ones depending on your time zone and location
- The strategy works for major currency pairs like GBP/USD or EUR/USD. These are the best ones to start. Later, you can experiment with many other pairs as well.
Rules when using this 50 pips a day forex strategy
When we have all needed for the 50 pips a day Forex trading strategy, we can start trading. To make the most of this, traders should consider several essential rules that refer to the right technique. Here are some of the important ones:
- Wait for GMT 7 a.m. candlestick to close and open buy stop order (2 pips above the high) immediately and sell stop orders (2 pips below the low) .
- The Chart price will move towards high or low and activate one of the pending orders. Then, you may cancel another order.
- To manage your risks, use a stop-loss order placed from 10 to 5 pips above the high or low of the candlestick. You may increase or decrease the distance to the stop-loss depending on the candlestick length.
- Set the profit target to 50 pips.
- Repeat the same process the next day.
If your real trades bring you to good profit steadily, you can use this strategy each day. but, if the results are floating, you need to exit the trade fast by the end of the day.
forex trading 50 pips a day Risk-management
This strategy is not as flexible as some may think. It was designed for day trading. That means that many swing traders will hardly benefit from this strategy. They are supposed to use fo technical indicators and analysis instead. To reduce the potential risk, using stop-loss orders is a good idea.
Read More: Candlestick Traders – For FREE