Welcome to another episode of strategy articles and videos where we reveal profitable strategies and this time it is going to be a 50 pips a day trading strategy using hedging.
50 Pips a day consistently? No, I didn’t say that. This is forex trading and things won’t happen consistently as it’s usually extremely unpredictable.
Therefore, the goal here is to use this strategy to secure at least 50 pips a day with minimal effort. Yeah, I said at least!!
Strategy Summary – 50 pips a day trading strategy
- Strategy: 50 pips a day trading strategy + hedging in trending market
- Pairs: Any currency Pair Should work but I am using GBPUSD here because of the relatively low spread that it offers
- Time Frame: For a currency pair like the GPB/USD, it’s at its ripest at around 8 am-12 pm because its the start of the day and traders to get a piece of that volatility cake
- Indicators: RSI & Support and Resistance to determine the Trend.
- PDF: Available
- Expert Advisor: Coming Soon
- Backtest Results: Coming Soon
- Trading Account Tests: Coming Soon
- Critiques: Looking forward to other traders using this strategy and providing feedback so we can improve it together. Use the comment box below the page.
50 Pips A Day Trading Strategy in a Trending Market
First of all, you have to understand the different kinds of market structures and how they play a role in this strategy.
Don’t be intimidated by the word; market structure.
It’s just an ambiguous way to define what the market is doing at any given time.
At times you may have seen charts all the candlesticks look like they’re shooting up, or down depending on what’s happening in the market.
If it’s shooting up, it’s a bullish market.
Is it shooting down? then you’re probably looking at a bearish market.
That kind of market is called a Trending Market.
From the definition of the word trend, we can draw some meaning from this.
A Trending market simply put, is the consistent movement of market information/ data/ candlestick/bar chart in one direction over an elongated period of time.
Then there’s the other one.
The Consolidating/ranging market.
This is quite the opposite of a trending market in the sense that the market really isn’t doing anything.
The market is said to be Consolidating/ ranging when there’s an indecisive upward and downward movement of the market.
It continually bounces up and down within a range without really making any aggressive moves.
Now that that’s out of the way, I’m going to give you a piece of advice.
Consolidating markets is perfect for some strategies but NOT this one.
These types of markets don’t guarantee you any comfortable market entry or exit because of how ‘’undecided’’ the market structure is.
The market is literally juggling between ‘’bullish & bearish’’ and that’s something that cannot exist even in the same sentence as the word hedging.
Placing a trade entry in a consolidating or ranging market is the metaphorical equivalent of paddling a canoe in an unsettled body of water of the river.
That usually always leads to a crash.
It’s best to apply hedging strategies in a trending market.
Where the market is already moving in a clear direction.
Remember, hedging is a risk-mitigation tool first before its profit maximisation tool.
Another thing you want to emphasize is the spread and lot size.
It’ll be a shame if you’re just entering and exiting trades without a proper understanding of how to manipulate the spread and lot size of your strategy.
If this hedging strategy were to be a puppet and you the master, the lot size and spread would be the strings you use to pull the puppet.
Trading with currency pairs that have huge spreads is not going to be of any good to you.
The reason is, that currency pairs with huge spreads tend to delay potential hedging opportunities and strategies.
Making quick decisions is part of the bedrock of a successful hedging strategy so things like huge spreads are a no because of the delays.
Having a good setup and approach to assist you in discovering good setups can help you avoid making multiple trade entries.
This technique will serve as a kind of insurance policy, ensuring a consistent supply of profits.
Without further ado, let’s open some orders!
But Wait!! What is hedging anyway??
Hedging or Hedge trading is the trading technique that involves taking an opposite direction on an open trade.
Hedging quite literally is opening consecutive buy ad sell orders or the same asset to counter potential loss situations.
The Spread – How much is too much?
For this strategy, using currency pairs with a relatively low spread like the GBP/USD always helps you maximize profit and reduce market entry delays.
Other brokers may offer lower spreads, but I’m comfortable using GBP/USD, especially on MT4.
For insights into some of these other currency pairs, you can visit https://www.forexdominant.com/best-currency-pairs-to-trade/#1-eurusd.
You’d be guaranteed an extensive review of the what and why of these currencies.
The Indicators – What Are My Tools?
Since this strategy majorly centres on the market structure, you should, by all means, use a tool or indicator that confirms that.
Support & and Resistance Levels
This helps you identify the current market structure by identifying key areas where the market prices don’t cross.
It basically helps you know the highest possible price of an asset and the lowest possible price of that asset.
Doing this, helps you confirm the market trend.
whether it’s upward, downward, or consolidating.
RSI Indicator ( Relative Strength Index):
As I said earlier, you would need tools that confirm market movement and this helps you do just that.
Step by Step – 50 Pips a Day Trading Strategy – Entry and Exits Points
You’ll first need to confirm the current market structure.
Remember this strategy is majorly for trending markets, so you’ll need to confirm you’re in a trending market.
To do this you’ll need to use support and resistance levels along with your RSI.
At the start of the London opening, use the support and resistance key levels to ascertain the current behaviour of the market.
If there isn’t an obvious trend going on, wait for one.
Once you’ve gotten confirmation of a trend using your support and resistance key levels, confirm using your RSI oscillator.
You’d typically want to make sure your RSI levels are above 70 ( if you’re looking for a downtrend) or 30 ( if you’re waiting on an uptrend).
Once you’ve gotten double confirmation, proceed to place your entry.
We’re going to be working without a visible platform open because it really doesn’t matter the direction of the market.
As long as the principles are understood, you’d always make the right decision.
Place a buy trade at 1.830 putting your TP at 1.860 with a lot size of 0.1.
Usually, on a given trade, if you’re not sure if the market is going in your favour, you’d put a stop loss right below your trade entry.
But in this situation, we’re putting a sell stop.
Put your sell stop at 1.830 and increase the lot size to 0.2.
Make sure you identify the current market structure using indicators.
If your prediction reverses and the price doesn’t reach your take profit but instead reversed and hits your stop loss, then you’d be in a profit.
Because your second trade became active at 1.820 and easily secured your 20 pips profit at 0.2 lot size!
Maybe due to the random market factor the market doesn’t still hit the rake profit at 1.800 but instead continues on to towards 1.820 again.
Well, the best way to maximize this situation would be to place a buy-stop order at 1.830 for 0.4 lots in anticipation of a rise.
Continue this sequence while doubling the size of your lot with any given sequence.
Preferably something small like 0.01, 0.02,0.4,0.6, and so on.
As long as you keep closing your stop loss on every new trade, you’re 99.9% of the time guaranteed a riskless new trade.
You also need to pay attention to the timeframe/ trading session.
You MUST be cautious when choosing your trading session.
For a currency pair like GBP/USD, look out for the London open.
It’s at its ripest at around 8 am-12 pm because it’s the start of the day and traders want to get a piece of that ‘’volatility cake’’.
Stick around with this strategy during this timeframe and you’d be glad you did so.
CONCLUSION – 50 pips a day trading strategy
I hope you can see the amazing possibilities that this technique offers.
To summarize, you take a position in the direction of the current intraday trend.
To figure out which way the market is moving, I recommend looking at the H4 and H1 charts.
In addition, I recommend that you use the M15 or M30 as your trading and timing windows.
You’ll hit your initial TP target 90% of the time if you do it this way, and your hedge position will never need to be activated.
Remember, the goal is to reduce risk and maximize profit.
So, your priority is always to make sure your first trade is a winning trade. 😊