The 50 Pips A Day Forex Trading Strategy is designed to catch the early market move of GBPUSD or EURUSD, but you can absolutely try it with other major currency pairings.
It is a rather basic day trading strategy, but keep in mind that many of the finest day trading methods that succeed are actually extremely simple in design, which allows them to be quite strong.
Because you do not need to study intricate indicators or price patterns, I believe this is an excellent day trading strategy for novices.
The trade setup is straightforward, but risk management, like with any trading strategy, is critical to your ultimate performance. It is comparable to the London breakout system, which is also available on this page.
We will be using the main Forex currency pairings, and the first thing you will want to do is pull up the daily chart and seek for a pair with a reasonable daily range.
Our major trading aim for the day is to capture 1/3 - 1/2 of the daily trading range of our chosen currency pair.
Setup of a Daily Trading Strategy
To maintain this standard, our method will use the 7 a.m. GMT candlestick on the 1 hour Forex chart. Check that the timing on your MT4 chart corresponds to 7 a.m. GMT. If not, check with your Forex broker.
You may also use Google to get the time in your time zone. It is 3:00 a.m. in my time zone.
Are you in need of a Forex indicator? No. This day trading strategy is a pure price action trading method that does not involve the use of any trading indicators.
What time period do you intend to use? For our purposes, we will utilize a one-hour chart, although you may absolutely test with various time periods.
Is it possible to utilize any currency pair? To begin, you may wish to stay with the big pairings (VS USD), particularly the EURUSD and GBPUSD.
Also Read: Learn How To Use Chart Patterns Effectively
THE 50 PIPS A DAY SYSTEM'S TRADING RULES
When the 7 a.m. GMT candlestick closes, you must place two opposing pending orders: a buy stop order 2 pips above the high and a sell stop order 2 pips below the low of the 7 a.m. GMT candlestick.
When the price of one of the pending orders is activated, you cancel the other pending order that has not been activated.
To manage your trading risk, place a stop-loss order 5-10 pips above the high/low of the 7 a.m. GMT candlestick after it closes (or has formed). If you observe that the 7 a.m. GMT candlestick is too short and that your stop loss is too near to the entry price, raise your stop loss distance to anywhere between 15-20 pips.
Set a profit goal of 50 pips.
Allow the market to do its thing after you have joined the deal.
If your transaction meets its profit objective for the day, it is fantastic! Repeat the technique the next day.
If your transaction has a floating profit or loss, wait until the end of the day to terminate your trade, regardless of profit or loss.
Consider some trading instances in which the Forex trading signals either won or lost.
The vertical dotted line placed on the chart symbolizes the GMT time of 7 a.m., and they are separated by 24 hours ( 1 day).
Referring to the EURUSD chart above:
Examine the "what if" scenario of the most recent 6 days on the EURUSD chart.
Following the trading criteria of the 50 pips a day trading method, there would have been a total of 6 transactions (excluding the present day), with 4 deals being winners and 2 trades becoming losers.
Frequently Asked Questions About the 50 Pips A Day Trading Strategy
Why are we utilizing the candlestick's high and low points?
Also Read: Relative Strength Index Trading Strategy
The highs and lows often reflect both support and resistance, but on a very limited basis. When support or resistance is broken when volume enters the market, it might lead in large movements in the triggering direction.
Is not it possible to choose a trading direction and trade just one side?
Yes, but you will have to accept missing certain deals from time to time. We hear that you should "trade with the trend," but there are times when the direction of price is not in the trend direction, and price might vary dramatically. For example, if you witness a big momentum move against the trend, it will almost always be followed by another leg counter-trend. There are several pips to be discovered.
Is this method good for swing traders?
This trading strategy was designed for day traders, although "letting gains run" has its advantages. You will undoubtedly want to be able to assess trend strength using technical analysis to see if this is a trade you can hold.
Can I use a limit order while trading the 50 pips a day strategy?
This is one of the day trading strategies that seeks to trade support and resistance breakouts. There are times when breakouts occur, followed by a retreat, which might provide you with an entrance. Price, on the other hand, will often run off and not look back, leaving you on the side-lines.
What about the bear and bull traps?
Yes, this method may have you triggered into the trade and swiftly stopped out when the bull trap or bear trap plays out.
How about applying it in the stock market intraday?
I have never looked at the stock market, but there is another breakout trading strategy that employs support and resistance. Because they are founded on market dynamics, these notions are not limited to a single market to be effective. All I can say is that you should put it to the test.
Also Read: Top Scalping Strategy In Forex Trading
Are free trading methods like this one as good as paid ones?
Some would argue that value has a cost. Others would argue that the finest things in life are those that are free. You must evaluate if any of the tactics presented on this trading strategy website are good. To be successful in trading, you do not need to spend a lot of money on a Forex trading method.
Do you have any risk-management advice?
Only you know how comfortable you are with danger. The greatest suggestion I can ever provide is to utilize a stop-loss no matter what day trading strategy you employ. If you do not understand the hazards of trading, you may lose your whole trading account in a single deal.
Is this the most effective day trading strategy for you? Will you get the trading success you seek? You just never know.
Now that you have learned the basics, why not go back in time, open up your charts, and do some fast back testing to see how this trading strategy performs?
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