Are you a novice trader, facing a dilemma: how to start? Then the “20 pips per day” strategy is for you. It was created long ago and always showed stable results. And there are not trends that it will cease to work in the foreseeable future. But this is a market, therefore, be vigilant when applying any trading strategy and this one in particular. Here are the basic rules for using the 20 pips per day strategy:
• You need to start working later than 11:00 GMT.
• Do not start working before the release of important political or economic news - when the market is very unpredictable.
• If you decided to work on the day of the news release, then do it only two hours after they were released, the market should stabilize during this time.
• If no major events are foreseen, then it’s best to start at 12:30 GMT.
• First, put the momentum 5 and sma 20 (moving average) indicator on the chart of the selected currency pair. These are standard indicators for the MT-4 terminal.
• Select the time interval as thirty minutes, the type of chart is Japanese candles, any currency pair is desirable, preferably a highly volatile one. For example USDCAD, GBPUSD, etc.
• Wait for the candle to close above 20 sma, while the momentum 5 will be higher, even a little, the average level then it is a buy signal. If the candle is closed below 20 sma, and momentum 5, respectively, is below the average level - this is a sell signal.
• Put Take Profit to 20 pips, but it will be justified to use a trailing stop with a step of 1 pip, or use the standard terminal trawler to reach 10-15 pips; take 30-50 percent of the trade when profits reach 20-30 pips, and leave the rest for trailing. In the case of luck, the profit will be much more than 20 pips!
• Stop Loss is set immediately, about 20 pips - either for sma 20, or for the maximum of the previous candle if it crossed sma 20.
• For caution, in the case when the price crosses sma 20 after placing an order and closes there, the order should be closed immediately.
This strategy works at any time interval, as long as there is greater volatility. Therefore, the best choice is the American or European trading session.
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FAQs
Chasing profits: Trying to make more than 20 pips a day can lead to risky trading decisions and potential losses. Not having a solid risk management plan: Risk management is crucial in forex trading, and not having a proper plan in place can result in significant losses.
How to get 20 pips daily? ›
To achieve 20 pips a day, selecting the right currency pairs to trade is crucial. Some currency pairs are known for their higher volatility and are better suited for short-term trading. EUR/USD and GBP/USD are popular choices for day traders due to their liquidity and tight spreads.
What is the best currency pair for 20 pip challenge? ›
Forex scalping strategy “20 pips per day” enables a trader to gain 20 pips daily, i.e. at least 400 pips a week. According to this strategy the given currency pair must move actively during the day and also be as volatile as possible. The GBP/USD and USD/CAD pairs are deemed to be the most suitable.
How much profit is 20 pips? ›
In this instance, one pip is a movement of 0.0001, so the trader has made a profit of 20 pips (1.0568 – 1.0548 = 0.0020 which is the equivalent of 20 pips). The pip value in USD is (0.0001 x 100,000) / 1.0568 = $9.46.
How many pips a day is good? ›
However, most experts agree that between 1 to 10 pips per day is a reasonable goal for most traders. As for trading 0.05 lots per every 100 dollars capital, this is generally considered to be a safe amount. This is because it allows for proper risk management while still providing a good opportunity for profit.
What is 20 pips rule? ›
This document summarizes the 20 Pips Daily Price Action Forex Breakout Strategy, which aims to profit from 20 pips of daily currency movement. Traders place buy or sell pending orders 2-3 pips above or below the daily high or low. The stop loss and take profit targets are both set to 20 pips.
Is 10 pips a day profitable? ›
Going for 10 pips is a basis on which you can start collecting small gains and confidence. But, in my opinion, going strictly for 10 pips every time is not going to get you very far. Ending up with AVERAGE gains of 10 pips per trade is great, but that implies some of your trades are going to be worth more, some less.
How many pips make a dollar in forex? ›
A standard lot refers to 100,000 units of base currency and equates to $10 per pip movement. A mini lot is 10,000 units of base currency and equates to $1 per pip movement.
How many pips is $10? ›
The pip value is $1. If you bought 10,000 euros against the dollar at 1.0801 and sold at 1.0811, you'd make a profit of 10 pips or $10.
How many dollars is 50 pips? ›
For example, if you are trading one standard lot of EUR/USD, then a movement of 50 pips is worth $50. This is because each pip is worth $0.10 for a standard lot of EUR/USD. Similarly, if you are trading one mini lot of EUR/USD, then a movement of 50 pips is worth $5, and for one micro lot, it is worth $0.50.
Currency pairs like GBP/JPY, EUR/JPY, AUD/JPY, and USD/ZAR are notable for their substantial pip movements. Traders seeking opportunities in these pairs must tailor their strategies to the inherent volatility, prioritize risk management, and stay vigilant about economic developments.
What is 0.01 lot size in dollars? ›
This lot size accounts for 1,000 base currency units in every forex trade, determining the amount of a particular currency. Suppose you're trading the USDJPY (U.S. Dollar-Japanese Yen) currency pair, and the base currency is the USD. In that case, a 0.01 lot is equivalent to 1,000 U.S. dollars.
How many pips make a lot? ›
How do I calculate pip size for a lot? The majority of currency pairs have a standard pip value of 0.0001 and are measured to five decimal places. 1 lot is 100,000 units of a currency. If you prefer to open smaller positions, you can choose to trade either mini lots (10,000 units) or even micro lots (1000 lots).
How do you convert pips to cash? ›
To convert the value of the pip to U.S. dollars, just multiply the value of the pip by the exchange rate, so the value in U.S. dollars is $10 (8.93 * 1.12).
What is the average daily pip range? ›
The forex average daily range in pips is the total number of price movements (in terms of points) a currency pair typically makes throughout the day. For example, the average pip movement per currency pair can range from 30 to 100 pips per day.
Is 20 pip challenge good? ›
In conclusion, the 20 pips challenge can be beneficial to some traders, especially those who need a structured approach to discipline and risk management. However, it's important to recognize that it's not a one-size-fits-all strategy, and its suitability depends on individual trading goals and preferences.
