A forex strategy refers to a set of rules, methods, and trading patterns that traders use to make decisions about entering and exiting trades. A successful trading strategy should be based on technical analysis, fundamental analysis, or a combination of both, helping traders achieve consistent profits with proper risk management.
Forex strategies can be designed based on timeframes (short term, medium term, or long term) and trading styles (scalping, day trading, swing trading, etc.). Additionally, tools such as technical indicators, price patterns, price action, and capital management play a key role in the successful execution of a strategy.
Why Is Having a Clear Trading Strategy Essential?
A trading strategy helps you determine entry and exit points based on specific data and analysis, preventing random and unplanned trades. Additionally, with a structured system, you can evaluate your performance, correct mistakes, and achieve continuous improvement.
Moreover, a strategy ensures that you adhere to risk management rules, protecting your capital from unexpected market fluctuations. Ultimately, a professional trader with a tested and optimized strategy can have greater confidence in their decisions and maintain consistent activity in the market.
General Introduction to the 50 Pips Per Day Strategy
The 50 Pips Per Day Strategy is a popular forex trading method where traders aim to secure 50 pips of profit daily. This strategy is based on technical analysis and price action and is typically executed within short to medium timeframes.
Traders using this approach usually focus on major currency pairs such as EUR/USD, GBP/USD, and USD/JPY, as these pairs have high liquidity and offer more stable price movements. Entry points are determined by identifying the daily trend, key support and resistance levels, and confirming entry signals with tools such as moving averages, candlestick patterns, and technical indicators.
To succeed with this strategy, traders should set a take profit (TP) of 50 pips and place a stop loss (SL) at a level that maintains a logical risk to reward ratio (e.g., 1:1 or 1:2). Additionally, proper capital management and adherence to the trading plan are crucial for long term success.
Who Is the 50 Pips Per Day Strategy Suitable For?
The 50 Pips Per Day Strategy is an ideal option for traders seeking consistent and steady profits from the forex market. Due to its simplicity and ease of execution, this strategy is particularly well suited for beginner traders who want a clear and understandable approach to trading.
Additionally, day traders who prefer to open and close trades within the same day can benefit from this strategy, as it eliminates the need to hold positions overnight, thereby reducing the risks associated with unexpected overnight market changes.
This strategy is also suitable for traders who possess patience and strong discipline, as its success depends on strict adherence to entry and exit points, maintaining stop loss and take profit levels, and avoiding emotional trading decisions.
However, scalpers, who aim for profits of less than 10 pips, and position traders, who hold their trades for weeks or months, may find this strategy incompatible with their trading style.
What Is the Goal of the 50 Pips Per Day Forex Strategy?
The primary objectives of the 50 Pips Per Day Forex Strategy are to achieve consistent profits from short term market movements with minimal risk, establish discipline and stability in trading, improve risk management and loss control, and identify optimal entry and exit opportunities. This strategy helps traders generate a net profit of 50 pips per day by using a structured approach based on technical analysis.
How to Trade Using the 50 Pips Per Day Strategy
The 50 Pips Per Day Forex Strategy follows a structured approach to identify market opportunities and execute trades effectively. Below are the key steps to trading with this strategy:
1. Identifying Market Direction
The first step is determining the overall market trend through technical analysis:
Analyzing higher timeframe charts (e.g., 4 hour or daily), Identifying uptrend, downtrend, or range bound market conditions and Using indicators such as Moving Averages (MA), RSI, and MACD to confirm market direction
2. Identifying Support and Resistance Levels
Support and resistance levels play an important role in this strategy. To identify them:
Spot key levels where price has reacted multiple times, Use horizontal lines, Fibonacci retracement tools, and price action to determine critical levels and Identify areas with high potential for price reversals or breakouts
3. Waiting for Trend Confirmation
Once market direction and key levels are identified, the trader must confirm the trend: Look for candlestick patterns such as Pin Bar, Engulfing, or strong breakout formations, Analyze trading volume and price reactions at support and resistance levels and Combine price action analysis with technical indicators for confirmation of entry signals
4. Allow the Pullback to Complete
One of the fundamental rules of this strategy is entering the trade at the right moment: Wait for the price retracement (pullback) to complete, Ensure the price stabilizes at a support or resistance level and Look for confirmation candles before entering the trade
5. Setting Take Profit and Stop Loss
For this strategy to be effective, proper risk management is essential: Take Profit (TP) should be set at 50 pips, Stop Loss (SL) should be determined based on risk to reward ratio (usually 30 50 pips) and Consider trade volume and risk percentage in each transaction
6. Capital Management
Even the best strategies won’t be effective without proper capital management: Risk per trade should not exceed 1-2% of total account balance, Trade size should be adjusted according to account balance and avoid overtrading and focus on high quality trade opportunities
Setup and Implementation of the 50 Pips Per Day Forex Strategy
For the successful execution of the 50 Pips Per Day Strategy, proper trading setup and configuration are essential. Below are the key aspects that need to be considered:
1. Choosing the Right Currency Pairs for This Strategy
To achieve 50 pips of profit per day, traders should focus on currency pairs with high liquidity and sufficient volatility. The best options include:
- EUR/USD: The most liquid currency pair with low spreads and moderate volatility
- GBP/USD: Offers fast price movements and high volatility, creating excellent profit opportunities
- USD/JPY: a relatively stable pair with well defined trends
- EUR/GBP: Suitable for smoother price movements and reduced risk
- XAU/USD (Gold/USD): a great option for traders seeking higher volatility
The selection of currency pairs depends on the trader’s trading strategy and risk tolerance.
2. Best Time Frames for Implementing the Strategy
- 1 Hour (H1): To determine the overall market direction and analyze the daily trend
- 4 Hour (H4): To filter out price noise and confirm trends
- 15 Minute (M15): To identify precise entry signals and define buy/sell points
3. Essential Tools for Analysis and Execution
- Moving Average (MA): Identifies market trends and key entry/exit points
- RSI (Relative Strength Index): Detects overbought and oversold conditions
- MACD (Moving Average Convergence Divergence): Confirms trend shifts and generates stronger signals
- Fibonacci Retracement: Helps identify potential pullback levels
Price Action Tools:
- Identifying Support and Resistance Levels: Used to define entry and exit points
- Candlestick Patterns: Such as Pin Bar, Engulfing, and Reversal Candles for confirming trade entries
Risk and Capital Management:
- Setting Stop Loss (SL) and Take Profit (TP) based on the pair’s volatility
- Maintaining a risk to reward ratio of at least 1:2
- Using an economic calendar to avoid major news events that could cause extreme market fluctuations
Rules for Using the 50 Pips Per Day Forex Strategy
For successful execution of the 50 Pips Per Day Strategy, adherence to the following rules is essential:
1. Choosing the Right Currency Pairs
To enhance the accuracy and efficiency of trades, it is recommended to use currency pairs with high liquidity. Pairs such as EUR/USD, GBP/USD, and USD/JPY are considered ideal choices for executing trading strategies due to their high trading volume and strong liquidity.
For a trading strategy to perform effectively, you should select currency pairs that exhibit sufficient volatility to move at least 50 pips per day. This level of volatility provides multiple opportunities for entering and exiting trades, allowing you to experience greater profitability with better risk management.
2. Using the Appropriate Timeframes
1-Hour Timeframe (H1): In this timeframe, traders can identify the primary market trend.
Analyzing price movement within this period helps determine whether the market is in an uptrend, downtrend, or range bound (without a clear trend).
15-Minute Timeframe (M15): After determining the overall market direction on the 1-hour timeframe, traders move to the 15 minute timeframe to find more optimal entry and exit points. This timeframe is particularly suitable for short term trading and scalping, as it provides more detailed insights into price fluctuations.
Combining this timeframe with technical analysis tools such as RSI, MACD, and price action can help identify more precise trading opportunities.
4-Hour Timeframe (H4): Trend Confirmation and Noise Filtering
Using the 4-hour timeframe helps traders confirm the overall market trend. This timeframe is highly useful for filtering out price noise in smaller time frames, as it eliminates irrational fluctuations and focuses on stronger trends.
3. Defining Accurate Entry and Exit Points
Trade Only After a Clear Trend Formation and Pullback Confirmation:
It is preferable to enter a trade after a price correction (pullback) and a subsequent reversal in the direction of the main trend, as these points are usually lower risk and more profitable.
Enter Trades at Key Support and Resistance Levels, Not in the Middle of Market Fluctuations:
Trades should be executed within significant price zones, such as key support and resistance levels, as these levels typically indicate points of trend reversal or continuation. Trading in the middle of random market fluctuations carries high risk and increases the likelihood of receiving false signals.
Use Indicators and Candlestick Patterns to Confirm Entry:
Combining technical indicators such as RSI, MACD, and trading volume can help confirm entry signals. Candlestick patterns like Pin Bar, Engulfing, Doji, and Hanging Man can also indicate market direction changes or trend confirmations.
4. Setting Take Profit (TP) and Stop Loss (SL) Correctly
Take Profit Should Always Be Set at 50 Pips.
This amount is used as a standard limit in many trading strategies, as it is neither too conservative nor excessively risky.
Stop Loss (SL) Should Be Set Based on Risk Management Strategy, Typically Between 30-50 Pips.
Generally, conservative traders place the stop loss closer to the entry point (e.g., 30 pips) to minimize risk, while traders who allow for more market fluctuations set the stop loss at 40 or 50 pips.
Risk to Reward Ratio Should Be at Least 1:1 or Preferably 1:2.
The minimum recommended ratio is 1:1, meaning the take profit and stop loss amounts are equal. However, for long term profitability, it is preferable to use a 1:2 ratio or higher, meaning the take profit should be twice the stop loss. For example, if the stop loss is set at 30 pips, the take profit should be 60 pips.
5. Avoiding Trades in Unfavorable Market Conditions
Avoid Trading During Major Economic News Releases.
Reports such as interest rates, unemployment rates, inflation, GDP (Gross Domestic Product), and employment data can cause extreme market volatility. In such situations, prices may fluctuate by several pips in an instant, spreads may widen, and even trade orders may not execute correctly. Therefore, it is recommended to avoid trading at least 30 minutes before and after major news releases.
Do Not Trade When the Market Is Unstable or Without a Clear Trend.
In conditions such as extreme volatility, irrational instability, or low range movements without a clear trend, the likelihood of false breakouts and unsuccessful trades increases. Therefore, it is better to first analyze the market trend using technical and fundamental analysis and refrain from trading if no clear trend is identified.
Avoid Entering the Market During Low Liquidity Periods (Such as Late New York Session).
Do not enter the market during times of low liquidity, such as the late New York trading session (before the Asian market opens), public holidays, international events, and before the opening of major markets.
6. Risk and Capital Management
Risk a Maximum of 1-2% of Capital per Trade.
This means that if your trading account has $10,000, the maximum loss you should accept in a single trade is between $100 and $200. This approach ensures that even after several losing trades, you still have enough capital to continue trading and can recover losses with a few profitable trades.
Never Move the Stop Loss When in a Losing Position, but You Can Adjust the Take Profit If the Trend Strengthens.
Many traders are tempted to move their stop loss further away when in a losing trade, hoping that the price will reverse. However, this usually leads to increased losses and loss of control over the trade.
Use an Appropriate Lot Size Based on Your Account Balance.
Many traders choose improper lot sizes for their trades, which results in losses exceeding their account’s risk tolerance.
7. Trade Logging and Performance Analysis
Record All Trades in a Trading Journal to Identify Strengths and Weaknesses.
Maintaining a Trading Journal helps traders systematically review their trades and clearly observe the reasons behind their successes or failures. This journal should include comprehensive details such as the date and time of entry and exit, the traded currency pair or asset, order type (buy or sell), entry levels, stop loss (SL) and take profit (TP) levels, trade volume (Lot Size), risk to reward ratio, trade outcome (profit or loss), reasons for entering the trade (based on technical or fundamental analysis), and other relevant details. Keeping such records provides a better understanding of trading performance.
Review Strategy Performance Weekly.
Simply recording trades is not enough; continuous review and analysis of the trading strategy’s performance are also essential. The Forex market is constantly evolving, and a strategy that is effective today may require adjustments in the coming weeks.
Best Times to Use the 50 Pips Per Day Strategy
The best times to enter trades using the 50 Pips Per Day Strategy are as follows:
1. Overlap of the London and New York Sessions (12:00 – 16:00 GMT)
The optimal time to use the 50 Pips strategy is during the overlap of the two largest forex sessions: London and New York. During this period, liquidity and trading volume increase, leading to sufficient volatility for achieving 50 pips of profit. This is an ideal time to trade major pairs such as EUR/USD, GBP/USD, and USD/JPY.
2. London Session (07:00 – 10:00 GMT)
The London session is one of the busiest trading periods and is known for initiating major price movements in the market. The best time to enter trades is after the London market opens and trends are established. Pairs like EUR/USD, GBP/USD, and EUR/JPY exhibit high volatility during this session.
3. New York Session (13:00 – 17:00 GMT)
The New York session provides excellent opportunities for the 50 Pips strategy due to high trading volume and economic news releases from the U.S. Pairs such as USD/JPY, GBP/USD, and XAU/USD (Gold/USD) show significant volatility during this time.
4. Avoiding Trades During Unfavorable Market Conditions
Asian Session (21:00 – 04:00 GMT): Due to low liquidity, smaller price movements, and higher spreads, executing the 50 Pips strategy during this period is not recommended.
During Major Economic News Releases: Announcements of key economic data, such as interest rate decisions, NFP (U.S. Non Farm Payrolls), and GDP reports, can lead to unpredictable volatility, which may disrupt the strategy.
Late New York Session (After 20:00 GMT): Reduced trading volume and irregular price fluctuations can cause unexpected market movements, making it a less favorable time for trading.
The 50 Pips a Day Forex Strategy Book
The 50 Pips a Day Forex Strategy book, written by Laurentiu Damir, explores a structured trading method that enables traders to achieve a steady daily profit of 50 pips using a simple yet effective trading system.
This book is designed for both beginner and experienced traders, providing a detailed explanation of the strategy’s execution, from market trend identification to capital and risk management.