How does 50 Pips Forex Strategy Work



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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.
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
- Cons
- 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
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.
- 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.
For the 50 pips Forex strategy to be effective, it is highly recommended to trade with a broker that offers ECN accounts with tight spreads. Given that pending orders are placed within just a few pips of the previous hour's high and low, the strategy is very dependent on obtaining executable prices within those tight thresholds. Therefore, traders are best served using brokers known for low-cost ECN accounts providing highly competitive spreads on major currency pairs.
Traders with limited capital should also consider lower margin requirements and higher leverage because you never know how many orders will be triggered on any single day.
ECN Spread EUR/USD | ECN Spread GBP/USD | Min. deposit, $ | Max. leverage | Margin Call | Open an account | |
---|---|---|---|---|---|---|
0,1 | 0,15 | No | 1:500 | 90 | Open an account Your capital is at risk.
|
|
0,15 | 0,2 | No | 1:200 | 100 | Open an account Your capital is at risk. |
|
0,2 | 0,4 | 100 | 1:50 | 40 | Study review |
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.
Conclusion
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?
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.
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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.
Chinmay Soni is a financial analyst with more than 5 years of experience in working with stocks, Forex, derivatives, and other assets. As a founder of a boutique research firm and an active researcher, he covers various industries and fields, providing insights backed by statistical data. He is also an educator in the field of finance and technology.
As an author for Traders Union, he contributes his deep analytical insights on various topics, taking into account various aspects.
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).
A day trader is an individual who engages in buying and selling financial assets within the same trading day, seeking to profit from short-term price movements.
Forex leverage is a tool enabling traders to control larger positions with a relatively small amount of capital, amplifying potential profits and losses based on the chosen leverage ratio.
A Trailing Stop Order is a type of order that automatically adjusts the stop-loss level as the market price moves in a favorable direction, helping to protect profits.
Risk management is a risk management model that involves controlling potential losses while maximizing profits. The main risk management tools are stop loss, take profit, calculation of position volume taking into account leverage and pip value.
An investor is an individual, who invests money in an asset with the expectation that its value would appreciate in the future. The asset can be anything, including a bond, debenture, mutual fund, equity, gold, silver, exchange-traded funds (ETFs), and real-estate property.