10 Pips a Day Forex Trading Strategy - Learn How That Works

Scalping strategies are popular in the foreign exchange market due to several advantages they give. First, the performance does not depend on fundamental events and long-term trends with overcomplicated analysis. Second, frequent entries with a small lot size allow managing risks without putting too much pressure on the overall account balance. Third, the trading algorithm based on technical indicators is simple and reliable. And fourth, setting a modest target of a daily profit for 10 pips only allows traders to make sustainable income without too much effort and time spent analysing the market. The combination of those factors gave birth to 10 pips a day forex strategy.

What technical indicators are used in the strategy?



The algorithm is based on Bollinger Bands and Stochastic Oscillator. Both of the indicators are quite widely used and they underline each others’ strengths and smooth weaknesses. The Bollinger Bands indicator perfectly shows periods with large volatility, and points to price ranges above and below the middle (average) value. Stochastic signals when the underlying asset is getting overbought or oversold, pointing to extreme market conditions and periods when the trend is going to reverse. Thus, both indicators combine each other when producing a profitable trading signal, delivering 10 pips a day guaranteed.

What currency pair are suitable for the system?



As long as major currency pairs have much higher liquidity and trading volume, they are the most accurate in terms of the technical analysis. Such pairs as EUR/USD, GBP/USD, USD/CHF and USD/JPY are suitable for the 10 pips a day strategy.

What is the best timeframe to trade with 10 pips per day scalping strategy?



The scalping technique is based on ultra-short charts as the main approach is to get a comparatively small profit quickly with a large number of frequent entries and small trading volume. Thus, such timeframes as 5- and 15-minutes are the most suitable for the trading system. Longer timeframes would force traders to enlarge the distance of stop-loss orders, and market conditions could have changed in 30 minutes, for example. Ultra-short charts like 1-minute have too much market noise and false trading signals. Nonetheless, traders should keep in mind the rules of individual trading strategy, financial goals and money management rules when choosing the best timeframes to trade with 10 pips per day targets.

How to trade 10 pips a day strategy?



Before entering the market, traders should understand the processes happening with the currency pair. During the day, the asset is fluctuating due to several reasons such as real-money account, speculative flows, active trading hours, fundamental events, and so on. At some point, the price is getting to a certain extreme level, and the likelihood of a reversal is getting higher as prices are always attracted by average values. Bounces and retracement happen in this case, and they have to be used to benefit on the simplest 10 pips a day strategy technique.

Conditions to buy (long) a currency pair



  • A candlestick appears below the lower Bollinger Band;
  • Stochastic Oscillator is in oversold territory, below 20;
  • The next bar (so-called signal bar) has a different colour from the previous one, signalling a possible retracement;
  • Stochastic oscillator gets out of the oversold zone;
  • Open long positions on the next bar open.


10 Pips a Day Forex Trading Strategy - Learn How That Works


Conditions to sell (short) a currency pair



  • A candlestick breaks above the upper Bollinger Band;
  • Stochastic Oscillator is in overbought territory, above 80;
  • The next bar (so-called signal bar) has a different colour from the previous one, signalling a possible retracement;
  • Stochastic oscillator gets out of the overbought zone;
  • Open short positions on the next bar open.


10 Pips a Day Forex Trading Strategy - Learn How That Works


Order types for profitable trading



The right settings of take-profit and stop-loss orders would give a trader an answer on the question of how to make 10 pips a day trading forex as money management is the key to success. At the same time, one of the most important parameters in risk management is the profit/loss ratio. It would not be worth risking with a potential loss of 50 pips to gain such a small profit as 10 pips. And it would not be wise to set a profit/loss ratio as 10/1 as such conditions market happen rarely. As long as the trading strategy is focused on 5- and 15-minutes charts for major currency pairs, stop-loss and take-profit orders could be predetermined.

Setting stop-loss orders



Besides the pres-set distance in pips and the necessary profit/loss ratio, traders should also monitor the recent top or bottom of the market depending on the trend’s direction. Those pivot levels are usually crucial for the technical analysis and they work as resistance and support levels. Thus, it would be great to hide the stop-loss order beyond such a strong barrier. However, the key factor remains the profit/loss ratio when setting right stop-loss levels. Sometimes, traders should refuse to take the trading signal in case if a potential stop-loss would be too far from reasonable value.

Setting take-profit orders



This part of the equation is also essential as one of the market rules says: ‘take your money and run’. Some of the beginners lack any progress in forex trading as they do not grab the cash they make, leaving trading positions hanging in the market for too long, and waiting for a larger bargain. On the other hand, if a trading signal is strong then it would be reasonable to take what the market gives, and exiting too early would not be a good idea. However, making 10 pips a day is not a tough task with appropriate execution of the conditions described above, even if the trading signal would appear just once per day.
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10.09.2019
Investment strategies