50 Pips a Day Forex Strategy: Everything You Need to Know (2023) (2024)

All reviews, research, news and assessments of any kind on The Tokenist are compiled using a strict editorial review process by our editorial team. Neither our writers nor our editors receive direct compensation of any kind to publish information on tokenist.com. Our company, Tokenist Media LLC, is community supported and may receive a small commission when you purchase products or services through links on our website. Click here for a full list of our partners and an in-depth explanation on how we get paid.

Do you find forex trading to be complicated?

Spoiler alert: You’re not alone.

We’re not exactly breaking new ground when we say that a lot of things in life are complicated—but the forex market can be, too. When you’re not reading up on how the USD is reacting to recent announcements from the Fed, you’re scanning world news to try to anticipate changes in currency pairs. 💱

But not all forex trading has to be complicated! Some forex strategies are simple—and whether you’re a beginner just dipping your toe in the water of forex, or you’re a seasoned forex expert who just wants to sit back and relax with a straightforward game plan, simplicity can enrich our trading experiences.✅

The 50 pips a day forex trading strategy is simple—so if you’re looking for simple, you’ve come to the right place. This guide will take you through what this strategy is, how it works, and what to keep in mind before you start trading.

What is the 50 Pips a Day Forex Strategy?📖

The 50 pips forex strategy is a day trading strategy for forex. This means that you’ll be opening and closing positions pretty rapidly, rather than picking currency pairs that you want to invest in over a long period of time.

Basically, the idea behind the 50 pips strategy is to capture about 50% of the range a currency pair moves in a single day. Look at a candlestick chart for EUR/USD.

Each of those candlesticks represents the full range of the pair’s value in a given day. (Not sure what you’re looking at? Hop over to our Japanese candlestick chart guide and then hop right back.)

All currency pairs go through some natural fluctuation in a given day. You can guess the direction they might go based on trends from previous days, or news saying something like that increased manufacturing is increasing the value of the dollar in June 2021. The 50 pips strategy will help you capitalize on these daily fluctuations.

How 50 Pips a Day Works 👷‍♂️

So, you’re ready to become a day trader? Are you becoming one of the many people that’s causing forex daily trading volumes to increase 14% in the last year? We couldn’t be more proud!

Before you jump in, let’s make sure you have a strong handle on this strategy. Yes, it’s a simple strategy, but you need to do it right for it to work. Let’s go through strategy setup, trading rules, and how to manage your risk.

Setting Up the 50 Pips a Day Strategy 👇

First, bring up the 7 a.m. GMT 1 hour candlestick. We’ll be sticking to this chart for this guide, so make sure you are looking at the right thing. If you’re not sure whether your chart matches, just look up what 7 AM GMT is in your timezone. You can use other timeframes if you want, but we’ll be sticking to the one hour chart today.

Next, pick your pair. 50 pips a day has often worked with EUR/USD and GBP/USD. You can try it out with other pairs, but you’ll want to stick to the major pairs to begin with. Now you’re set up to start trading!

50 Pips a Day Trading Rules ✅

Now let’s dig into the rules of this trading strategy, step by step.

1. The first important moment is when the 7 AM GMT candlestick closes. As soon as this happens, you place two pending orders that oppose each other: a buy stop order 2 pips above the high point, and a sell stop order two pips below the low point.
   
2. Eventually, one of the pending orders will be activated as the currency pair fluctuates. Once that happens, cancel the other order.
   
3. Now, you want to control your trading risk. You can do this by placing a stop-loss order 5-10 pips above the high or below the low. If the candlestick is short, this might bring you too close to your entry price—in this case, you can place it 15-20 pips above or below.
   
4. Set your profit target to 50 pips.
   
5. Sit back and relax! Wait for the market to fluctuate, as we know it will.

Now we have two scenarios. In the first, you hit your profit target. Yay! You did it! Go celebrate and come back to do it all again tomorrow.

Of course, you also might not hit your profit target—you might have a floating profit or loss. In this case, you could exit your trade at the end of the day, no matter what your profit or loss was, and try again tomorrow. Or, you can move your stop loss to break even, and place the next trade on the new day’s 7 AM GMT candlestick.

Either way, the last step is the same: come back and do it all again tomorrow. As technology is giving trades more access, freedom, and flexibility, day trading strategies like this one only become easier.

Risk Management for 50 Pips a Day 🔎

Remember, this is a day trading strategy, which is just one of many ways to trade forex. Swing traders might not find it as useful, because this strategy doesn’t require technical indicators or analysis.

The primary way of mitigating your risk is using stop-loss orders. This will keep you from losing too much on any given trade—if the market is rocked from the UK reporting its highest COVID cases since February or other global events, you don’t want your little day trading position to take a major dive. Stop loss orders will get you out before that happens.

Is Trading 50 Pips a Day Worth It?⚖️

There are definitely profits to be had trading 50 pips a day. Basically, every successful trade will grant you a profit of 50 pips, which stands for percentage in point. 50 pips is equal to $0.0050—but that can add up fast!

Say you enter GBP/USD long at 1.6400. You’ve ordered your position to close once it hits 50 pips in profit—so 1.6450. Yes, if you only invested in one lot of GBP/USD, you have a miniscule profit of $0.0050.

But what’s more likely is that you’ve invested a more significant chunk of change in this position. Say you have $2,000 in your account. If you invested it all in GBP/USD today, you would earn %0.0050 per dollar invested. You can then multiply that number by 50 (pips)—and your profit is $10.

Over the course of the workweek, that could add up to $50, and your monthly income could hit $200—just for a few simple clicks each morning. Also, keep in mind that using leverage (like almost all traders do) can multiply your profits—for instance, using 100:1 leverage will bump your daily profit from $10 to $1,000, but also punish you if the trade goes bad.

Of course, that’s with a 100% win rate, and no one can guarantee that. Still, we want to show you the upper end of what’s possible so you can see how much you might stand to win, depending on the amount of money you invest and how often the trades go your way.

Day trading is all about making small trades that add up to bigger amounts of money. This means that you might not have a big windfall all at once, but forex scalpers can see steady profits as a result of their efforts. So keep at it, and slowly but surely watch your bank account rise!

Advantages and Drawbacks of Trading 50 Pips a Day 👍👎

As in all things, the 50 pips a day strategy will not be the best fit for all humans. It’s a great strategy for those who want to set and forget their forex trading—all you have to do is cancel one pending order after the other is activated. This strategy also keeps you from over trading, because it relies on just one trade per currency pair per day.

On the other hand, some day traders might enjoy setting up a lot of trades every day, in which case 50 pips a day won’t help them scratch that itch. Plus, you’re setting your maximum profit at 50 pips a day—while this helps you stay focused, your position could have moved 100 or 200 pips that day, and you didn’t reap all those profits. And of course, if you forget to cancel your second pending order, they could both be activated and hit your stop losses.

Tips for Trading 50 Pips a Day 🎯

You’re almost ready to start trading! Just a few last-minute tips to help you forge your way into this simple strategy.

Don’t Trade One Side ⚠️

You could theoretically do this if you want. Some traders prefer to trade with the trend, and anticipate what direction the price will go. But, we all know that prices can fluctuate unexpectedly. Placing both orders allows you to take advantage of whichever way the market happens to go.

Try in Different Markets 🌏

This whole strategy is based on support and resistance, and these concepts are not unique to the forex market. If you’re curious, try this out as an intraday strategy in the stock market and see how you fare.

Use a Stop-Loss 💡

Stop-losses are the best way to make sure you don’t get your whole account wiped out by one bad trade. This is your best risk-prevention strategy, so make sure to use it!

Is 50 Pips a Day Forex Strategy for Beginners?👨‍💻

Many beginners have had success with the 50 pips a day strategy. As technology makes the forex market more appealing, many newbies have found their way into trading forex. It can be an overwhelming world at first, which is why simple strategies like this one can really help.

There’s a whole lot beginner forex traders need to know, so make sure you are up on your forex lingo before you start making trades. This also isn’t the only strategy appropriate for beginners: range trading and trend trading are good options as well—you can even follow pro traders on your platform and copy their trades with a broker like eToro.

Conclusion 🏁

Now you’re ready to have a simple life filled with simple forex trades! Well, 50 pips a day might not answer all of life’s complicated questions. But wouldn’t that be nice?

On a more serious note—if you’re interested in 50 pips a day, you now have all the tools you need to give it a try. Make sure to track your wins and losses to see how this strategy stacks up to others you’ve tried. And don’t forget to cancel that second pending order and set your stop-losses!

Get Started with a Forex Broker

All reviews, research, news and assessments of any kind on The Tokenist are compiled using a strict editorial review process by our editorial team. Neither our writers nor our editors receive direct compensation of any kind to publish information on tokenist.com. Our company, Tokenist Media LLC, is community supported and may receive a small commission when you purchase products or services through links on our website. Click here for a full list of our partners and an in-depth explanation on how we get paid.