10 pip Forex scalping strategy
How Does 10 pips a day forex strategy work? On the hourly interval after the close of the candle, place pending orders above and below the opening level of the next candle at a distance of 2-3 points. Set take profit at a distance of 10 pips from each order.
Forex scalping is a popular trading strategy that involves taking small, frequent trades in an attempt to make quick profits. The 10 pips scalping strategy is a simple and straightforward way to trade the markets, and it can be used in any timeframe from 1 minute up to 1 hour. The key to success with this strategy is to make sure you take your profit as soon as you reach your 10-pip target.
This means you need to be quick and decisive when you enter and exit trades. In addition, it's important to manage your risk carefully, as even a small loss can quickly eat into your profits. With proper risk management and a bit of practice, the 10 pips per day scalping strategy can be a great way to generate consistent profits in the forex market. This guide explores more about this strategy to help you understand better about how it works.
Glossary
Forex pip is a measurement unit that demonstrates the change in value caused by the price fluctuation between the currencies of a certain currency pair.
Trading strategy is a set of rules and algorithms used for making decisions when trading in the Forex market. The trading strategies are based on either technical or fundamental analysis, and there are also combined trading strategies.
Spread is the difference between the best buy price and the best sell price in currency exchange and CFD trading.
Leverage means borrowed funds provided by the broker, which allow traders to manage substantial amounts in the market, while having only a small amount of own capital used to cover the margin requirements.
What Is the 10 Pips a Day Forex Strategy?
The 10 pips a day compounding strategy is a simple strategy designed to help you grind out small profits each day. The goal of the strategy is to make 10 pips each day and to do so with a relatively small risk profile.
The strategy relies on catching small movements in the market and then taking profit quickly. This makes it well-suited for trading during volatile or choppy market conditions. The strategy can be implemented using a variety of different timeframes, but the most popular choices are the 5-minute and 15-minute charts.
To implement the strategy, you'll need to set up a pending order just below the current market price (for a buy trade) or just above the current market price (for a sell trade). Once your order is hit, you will then take profit at 10 pips above/below your entry point. This represents your daily profit target.
The stop loss for the trade should be placed at 20 pips, which gives you a 1:2 risk/reward ratio. This is a fairly aggressive ratio, but it's necessary to make the strategy viable in the long run. Overall, the 10 pips per day scalping strategy can be a useful addition to your toolkit, allowing you to grind out consistent profits in choppy or volatile market conditions.
The Pros and Cons of the 10 Pip a Day Strategy
While the strategy can be effective, there are also some drawbacks to consider. Here are some of the pros and cons of using the 10 pips a day Forex strategy:
👍 Pros
•The strategy is easy to understand and implement.
•It doesn't require a large amount of capital to get started.
•It can be used to trade a variety of different currency pairs.
•The risk per trade is relatively small.
•There's potential for consistent profits over time.
👎 Cons
•The profits are small, as they're limited to 10 pips per day, so it may take a long time to build up capital.
•The strategy doesn't take into account larger trends in the market, so it's possible to lose money if the market moves against you.
•There's a lot of discipline required to stick to the strategy, as it's easy to second-guess your decisions and enter trades too early or too late.
•Slippage and commissions can eat into your profits if you're not careful.
•You need to have a good understanding of technical analysis before you can use the strategy effectively.
How to Use 10 Pips Forex Scalping Strategy
The 10 pips scalping strategy is an easy-to-use strategy that can be used by beginner and expert traders alike. To put it into practice, all you need to do is follow these simple steps:
1. Set a 1-hour candlestick chart to 7 AM GMT.
2. When the candlestick ends, place two pending orders - a buy-stop order two pips above the high and a sell-stop order two pips below the low.
3. Wait for the price to move toward one of your orders. When one of your orders is executed, cancel the other one.
4. For a buy order, place a stop-loss order approximately 5 pips below the low of the 7 AM GMT candlestick. For a sell order, place a stop-loss order approximately 5 pips above the high of the 7 AM GMT candlestick.
5. Place a take-profit order of 10 pips.
That's it! Your position will automatically close when the price hits the take profit of stop loss orders. That said, understand that it may not hit those orders at all, and at the end of the day, you'll have to decide whether you want to close or leave it open.
10 Pips Strategy Risk-Management Tips
When it comes to trading forex, risk management is key. You want to make sure that you're always mindful of the potential risks involved and that you're taking steps to minimize those risks. Here are some risk management tips for the 10 pip scalping strategy.
Use a Stop Loss
A stop loss is an order that you place with your broker to sell your currency if it reaches a certain price. This price is usually below the current market price, so if the market does start to turn against you, your stop loss will help you limit your losses.
Take Partial Profits
Rather than letting all of your 10 pips run, you can take partial profits at certain milestones. For example, you might take half of your profits at 5 pips and move your stop loss to breakeven. Then you can let the rest of the position run until it hits your target profit or gets stopped out.
Don't Over-Leverage Yourself
When trading forex, it's easy to get caught up in the excitement and start levering yourself too much. Remember that leverage is a double-edged sword- while it can help you make more money, it can also cause you to lose more money if things go against you. So, be careful not to overdo it.
To do this, the trader will use two indicators: the Bollinger Bands and the Stochastic Oscillator. The Bollinger Band is used to identify entry and exit points, while the Stochastic Oscillator is used to compare the most recent closing rates to the highest and lowest prices during a given period. The most popular timeframes you can use for this strategy are the 5 to 15-minute charts.
Is 10 Pips a Day Strategy Good for Me?
Generally speaking, the 10 pip scalping strategy is best suited for experienced traders with a solid understanding of risk management. This is because the strategy requires frequent entries and exits, which can be expensive if not done correctly. In addition, the strategy carries with it a higher degree of risk than some other approaches. As such, it's not suitable for traders who are new to forex or those with a limited capital base.
However, for experienced traders who are comfortable with taking on a bit more risk, the 10 pip per day strategy can be an effective way to generate consistent profits. This method is also suited for intraday traders but could work potentially well for swing traders as well.
Best Time Frames and Indicators for 10 Pips a Day Strategy
As for timeframes, the shorter, the better. In general, shorter time frames are more suited to active traders who are looking for quick profits. The tradeoff is that shorter time frames tend to be more volatile, so there is a greater risk of losses.
For most traders, this strategy works best on lower timeframe charts like the 5-minute or 15-minute charts. That said, you can also use it on higher timeframe charts like the 4-hour or daily chart. It just takes a little longer to hit your profit target on those timeframes.
Finally, as for indicators, there are lots of different ones you can use with this strategy. Some popular choices include moving averages, Bollinger Bands, MACD, Stochastic Oscillator, and RSI.
When it comes to forex trading, technical indicators are a valuable tool to help you make decisions about when to buy and sell. But with so many different indicators available, it can be tough to know which ones to use. In this article, we'll take a look at four popular forex indicators: Bollinger Bands, MACD, Stochastic Oscillator, and RSI.
Bollinger Bands
Bollinger Bands are used to measure market volatility. The bands are created by placing a standard deviation above and below a moving average. If the market is relatively volatile, the bands will be wide. If the market is relatively calm, the bands will be narrow. Bollinger Bands can help you gauge whether a market is overbought or oversold.
MACD
The MACD (Moving Average Convergence Divergence) is a trend-following indicator that measures the difference between two moving averages. If the MACD line is above the signal line, it indicates that the market is in an uptrend. If the MACD line is below the signal line, it indicates that the market is in a downtrend.
Stochastic Oscillator
The Stochastic Oscillator is a momentum indicator that measures how close prices are to recent highs and lows. If prices are near recent highs, the oscillator will be near 100. If prices are near recent lows, the oscillator will be near 0. The Stochastic Oscillator can help you gauge whether a market is overbought or oversold.
RSI
The RSI (Relative Strength Index) is a momentum indicator that measures how fast prices are moving up or down. A reading of 100 indicates that prices are moving up at a faster pace than they have in the past 14 periods. A reading of 0 indicates that prices are moving down at a faster pace than they have in the past 14 periods. The RSI can help you gauge whether a market is overbought or oversold.
Ultimately, it's up to you to experiment and see what works best for you. But those are some of the most commonly used indicators with this strategy.
Best Forex Brokers for Scalping
Summary
The 10 pip Forex scalping strategy is a simple and easy-to-use strategy that can help you make money in the market. The key to this strategy is to take small, consistent profits while keeping your risk low. This can be done by trading short-term price movements with a tight stop loss. While the potential profit from each trade may be small, the frequency of these trades can increase over time, providing you with a steady income stream.
Additionally, by diversifying your portfolio across several different currency pairs, you can minimize your risk and maximize your chances of success. With a little practice, the 10 pip Forex scalping strategy can be an effective way to generate profits in the market.
FAQ
What is 10 pip Forex scalping strategy?
The 10 pip Forex scalping strategy is a simple and easy way to trade the market, taking advantage of small price movements. It involves buying and selling currency pairs, with the goal of making a profit from the difference in the prices. The strategy can be used on any time frame, but is most commonly used on the 5-minute or 15-minute charts.
How does 10 pip scalping strategy work?
The strategy works by buying and selling currency pairs in order to make a profit from the difference in the prices. For example, if the EUR/USD pair is trading at 1.1050 and the USD/CHF pair is trading at 0.9950, the trader would buy the EUR/USD pair and sell the USD/CHF pair. If the price of the EUR/USD pair increases to 1.1080 and the price of the USD/CHF pair decreases to 0.9920, the trader would exit their positions and realize a profit of 30 pips.
What are the risks of 10 pip Forex scalping strategy?
While the 10 pip Forex scalping strategy can be profitable, there are also some risks involved. One risk is that prices can move against the trader very quickly, resulting in a loss. Another risk is that brokers may require a higher minimum deposit or may not allow scalping strategies at all. Finally, because this is a short-term trading strategy, it's important to be aware of potential fees associated with short-term trades, such as rollover fees.
Is 10 pip Forex scalping strategy right for me?
The answer to this question depends on your trading goals and objectives. If you're looking for a quick and easy way to trade forex, then this strategy might be right for you. However, if you're not comfortable with taking on additional risk, then this might not be the best approach. Ultimately, it's important to test out different strategies and find what works best for you.
Team that worked on the article
Oleg Tkachenko is an economic analyst and risk manager having more than 14 years of experience in working with systemically important banks, investment companies, and analytical platforms. He has been a Traders Union analyst since 2018. His primary specialties are analysis and prediction of price tendencies in the Forex, stock, commodity, and cryptocurrency markets, as well as the development of trading strategies and individual risk management systems. He also analyzes nonstandard investing markets and studies trading psychology.
Olga Shendetskaya has been a part of the Traders Union team as an author, editor and proofreader since 2017. Since 2020, Shendetskaya has been the assistant chief editor of the website of Traders Union, an international association of traders. She has over 10 years of experience of working with economic and financial texts. In the period of 2017-2020, Olga has worked as a journalist and editor of laftNews news agency, economic and financial news sections. At the moment, Olga is a part of the team of top industry experts involved in creation of educational articles in finance and investment, overseeing their writing and publication on the Traders Union website.
Olga has extensive experience in writing and editing articles about the specifics of working in the Forex market, cryptocurrency market, stock exchanges and also in the segment of financial investment in general. This level of expertise allows Olga to create unique and comprehensive articles, describing complex investment mechanisms in a simple and accessible way for traders of any level.
Olga’s motto: Do well and you’ll be well!
Mirjan Hipolito is a journalist and news editor at Traders Union. She is an expert crypto writer with five years of experience in the financial markets. Her specialties are daily market news, price predictions, and Initial Coin Offerings (ICO). Mirjan is a cryptocurrency and stock trader. This deep understanding of the finance sector allows her to create informative and engaging content that helps readers easily navigate the complexities of the crypto world.