How does 50 Pips Forex Strategy Work
The 50 pips a day Forex strategy is a great option for traders who want to gain a nice profit with minimum interaction. All you have to do is open two opposing pending orders and select a stop loss and take profit order for the order that is executed, then cancel the other one.
Are you just starting in the Forex trading field and are looking to learn the easiest and the best strategy? In this case, the 50 pips a day Forex strategy is one of your best options because it allows you to easily earn an average of 50 pips on a trend movement.
While reading this article, you will discover what is the Forex 50 pips a day strategy, what are its pros and cons, and how to use it.
Glossary
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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.
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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.
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Spread is the difference between the best buy price and the best sell price in currency exchange and CFD trading.
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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 50 pips a day Forex strategy?
The 50 pips a day Forex strategy is originally a day trading strategy that is designed to work in one-hour timeframes and aims to profit from approximately half of a currency pair's intraday volatility. However, this strategy works with a limited number of currency pairs only. The best currency pairs for this strategy are the big ones, such as GBP/USD and EUR/USD.
Pros
This strategy is indicatorless
This means you do not have to spend a lot of time each day looking on the charts and look for different indicators and graph patterns
It does not require constant monitoring of the monitor
With this strategy, you do not have to constantly monitor your trade to identify the best time to open or close them. All it takes is a few clicks in the morning.
Cons
You can open only one trade per day for one asset
If you are one of those Forex traders that enjoy opening multiple trades per day for one asset, this strategy might not be for you.
It works for a limited number of assets only
This strategy is mostly suitable for big currency pairs like EURUSD and GBPUSD.
Your maximum profits are 50 pips a day per trade
Although this strategy is a simple one, it is not the most profitable one. Multiple other strategies allow you to gain higher profits, but they are more complex than this one.
Main rules of the 50 pips Forex strategy
The 50 pips a day Forex strategy is probably the easiest Forex strategy you can use. And to put it into practice, you only have to follow a few simple steps, which are:
Set a 1-hour candlestick to 7 AM GMT on your chart. This timezone works best for this strategy to capitalize on the daily movement.
When the 7 AM GMT 1 hour candlestick ends, you should place two opposing pending orders. The first pending order is a buy stop order placed two pips above the high, and the second is a sell stop order placed two pips below the low.
The price of the currency pair will move towards one of the orders and will activate it. The moment one of the orders is executed, you must cancel the other one.
For a buy order, you should place a stop-loss order approximately 5-10 pips below the low of the 7 AM GMT candlestick, and a stop loss for a sell order should be placed about 5-10 pips over the high of the 7 AM GMT candlestick.
Place a take-profit order of 50 pips.
The position will be automatically closed when the price of the asset hits the stop loss or the take profit order. However, in some cases, the price might not hit any of these orders by the end of the day, and you might have to decide if you want to close it or leave it open for longer.
The risk management in the 50 pips Forex strategy
Although the 50 pips a day Forex strategy is simple to use and it usually brings profits to the traders who use it, it can also bring them losses. So, traders should not risk money they can not afford to lose. Although some traders might be tempted to use large leverage to increase their profits, they should know that leverage is a double-edged sword; it can amplify the profits, as well as the losses.
If your broker allows you to place a trailing stop-loss order, you should use this opportunity. The advantage of a trailing stop loss is that whenever the price of the asset moves in your favor, the stop-loss moves as well, helping you secure your profits and minimize the losses. But when the price moves against your favor, it remains the same.
Is 50 pips a day strategy good for me?
The 50 pips a day Forex strategy is a great option for traders who want to gain a nice profit with minimum interaction. All you have to do is open two opposing pending orders and select a stop loss and take profit order for the order that is executed, then cancel the other one. So, if that sounds exciting to you, you should try it.
This strategy is most often used by intraday traders who prefer to close trades at the end of the day because it lets them secure the profits gained that day. But it can also be used by swing traders when the price of the asset does not hit the stop loss or take profit orders during that day. These traders leave positions open for at least two days because they think the asset will hit the take profit order the next day.
50 pips a day forex strategy - Where to learn more
If you are already intrigued by this Forex strategy and would like to learn more about it, you have the opportunity to do it by reading a book that explains this strategy in depth.
The book is called 50 Pips A Day Forex Strategy, and it is written by Laurentiu Damir. Laurentiu Damir is a Forex trader with over 14 years of trading experience that started writing trading ebooks in 2012. Since then, he has written multiple trading ebooks, but the 50 Pips A Day Forex Strategy is the most successful one, having a four stars rating on Amazon. In this ebook, the author explains the philosophy behind this strategy and how to increase the probability of making profits while using it.
You can read this book for free by downloading it from Amazon or other places online. You can download it as an ebook or buy it as a paperback.
12 Best Day Trading Books You Should ReadWhich brokers are best for strategy 50 pips a day
To have the best experience when using the 50 pips a day Forex strategy, we recommend you to trade with a reliable Forex broker because it improves your trading experience and your funds are more secure with a reliable broker. To help you choose the best broker, we prepared a short list of criteria you should look for. Here they are:
Regulation
You should choose a regulated broker because a broker regulated by a reputable regulator provides better trading conditions and better protection for its users' funds.
Low spreads and commissions
Forex brokers have to make money as well, and they earn from the spread and other types of commissions, such as deposit and withdrawal fees. The higher the spreads and commissions are, the lower your profit is.
Reviews from other users
You should read customer reviews before opening a trading account with a broker and making your first deposit. A large number of negative reviews should be a major red flag for you, and you should avoid that broker at all costs.
Admiral Markets - Best Forex App
Admiral Markets
Admiral Markets, based in London, is an FCA-regulated Forex broker that offers the MetaTrader 4, MetaTrader 5, and MetaTrader Supreme trading platforms. Admiral Markets also offers a beginner's demo account and a user-friendly mobile trading app available for IOS and Android devices. Admiral Markets is not only a great Forex broker, but it also allows its users to trade stocks, futures, and cryptocurrencies. Another benefit of this broker is that it allows you to use a trailing stop loss for your trades.
Admiral Markets has very low spreads in comparison with other traders. For example, the average EURUSD and GBPUSD spreads are just 0.1 pips.
There are multiple options available to deposit and withdraw money on your Admiral Markets account balance. There is no deposit minimum and commissions for bank transfers, but other deposit options such as credit card, debit card, and e-wallets, there is a $50 deposit minimum. Also, you can withdraw your money once a month without paying commissions.
RoboForex - Best For Automated Trading
RoboForex
RoboForex is a brokerage company that was founded in 2009. RoboForex has over 3.5 million customers from 169 different countries. RoboForex is well-known for its proprietary trading platforms. RoboForex offers some of the best trading platforms on the market, including MT4, MT5, and cTrader, as well as some excellent proprietary platforms, including R Stock Trader and R WebTrader.
RoboForex has an international license from Belize's IFSC regulatory, as well as a European license from CySEC. This demonstrates that trading with this broker is risk-free, and there should be no major issues. RoboForex allows traders to trade a wide range of assets, including currency pairs, stocks, indices, ETFs, commodities, and metals. It also lets you set a trailing stop loss for your trades to help you secure your profits.
One of the reasons traders from all over the world enjoy trading with this broker is that it has very low trading fees and no inactivity or maintenance fees. It also does not charge deposit fees, but withdrawal fees vary by withdrawal method. For some currency pairs, RoboForex spreads for Forex trading can be as low as 0.0 pips, which is a significant advantage for most novice traders.
RoboForex also has a copy trading feature called CopyFX that lets beginners easily copy other traders’ trades and increase their chances of making profits. This is a very easy-to-use copy trading software that lets traders easily choose which traders to copy using different filters such as profitability, best and worst deal, risk level, maximum drawdown, and others.
Summary
The 50 pips a day Forex strategy is one of the best strategies for beginner Forex traders because it is very simple to use, and you do not have to be a genius at interpreting indicators and graph patterns to effectively apply it.
Even though this strategy is very easy to use and it is usually very effective, it does not mean that you will always make 50 pips profit with it, so you should be careful when using it. To minimize the risks, you should be careful when setting the stop loss for your trades and place a trailing stop loss if you can. Also, avoid trading with big leverage.
FAQs
Does the 50 pips a day strategy work?
The 50 pips a day Forex strategy is one of the best strategies for beginner Forex traders because it is very simple to use, and you do not have to be a genius at interpreting indicators and graph patterns to effectively apply it.
How to get 50 pips per day?
You need to wait until the candle closes at 7:00 GMT, and then open a sell stop order (2 pips below the low) and at the same time a buy stop order (2 pips above the high). One of the orders will play, and you can cancel the second one.
How many pips per day is good in forex?
Traders need to remember that the ratio of stop loss to take profit is approximately 1:2. An aggressive and active strategy for making a profit is considered to be about 30 pips per day.
Can I lose money when using the 50 pips a day Forex strategy?
Unfortunately, you can still lose some money when using this strategy. But because you place a stop loss and do not use high leverage when trading, you can limit your losses.
Can I use the 50 pips a day Forex strategy with other currency pairs than EURUSD and GBPUSD?
Although some experienced traders might use this strategy for other currency pairs, it is riskier. As a beginner Forex trader, you should stick to these major currency pairs.
How much are 50 pips worth in Forex trading?
In the EURUSD and GBPUSD currency pairs, 50 pips are always worth 0.0050% of the amount invested in that trade. For example, if you invest $1000, your profit is $5, but if you invest $100,000, your profit is $500.
How much can I lose with this strategy?
Just in case this strategy is not profitable on a certain day, your losses depend on the stop-loss order you choose and the amount of money you invested in the trade. For example, if your stop loss was 10 pips and you invested $1,000 in that trade, your loss is $1.
Team that worked on the article
Mikhail Vnuchkov joined Traders Union as an author in 2020. He began his professional career as a journalist-observer at a small online financial publication, where he covered global economic events and discussed their impact on the segment of financial investment, including investor income. With five years of experience in finance, Mikhail joined Traders Union team, where he is in charge of forming the pool of latest news for traders, who trade stocks, cryptocurrencies, Forex instruments and fixed income.
The area of responsibility of Mikhail includes covering the news of currency and stock markets, fact checking, updating and editing the content published on the Traders Union website. He successfully analyzes complex financial issues and explains their meaning in simple and understandable language for ordinary people. Mikhail generates content that provides full contact with the readers.
Mikhail’s motto: Learn something new and share your experience – never stop!
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.
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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.