It’s funny how sometimes, the simpler something is, the more exciting it is. And when it comes to simple, it doesn’t get much simpler than the 20 pips a day forex strategy.
Every day, approximately seven trillion dollars worth of foreign currencies change hands. That’s equivalent to $1,000 for every single person on earth, which is just staggering when you think about it. If you also bear in mind that the majority of people on the planet aren’t trading the currency markets, then the average amount per head for each trader is probably huge. Grabbing a slice of that action could mean a sizeable chunk of money. For many traders, 20 pips daily could be a way to do it. Let’s take a look.
20 pips a day forex strategy
Many people approach the currency markets with the aim to get 50 pips a day or even 100. This is theoretically possible, of course. Many of the major currency pairs can move 100 pips a day, or even 150. However, capitalizing on such moves would obviously require getting in at exactly the right point before a 100 pip move. Doing this every day could prove much easier said than done.
But what about just 20 pips? A quick look at the charts for pretty much any one of the major pairs is likely to show multiple 20 pip moves throughout the day. Getting in on just one of these moves would obviously meet this goal. And coupled with a decent lot size (so long as your money and risk management allow it), this could generate a pretty decent side income.
For example, with a 5,000 USD account and by not risking more 2% of your capital per good risk management practice, a successful trade with a 10 pip stop loss, a 20 pip target, and USD as the quote currency would mean a profit of $200. Even with just a $3,000 account, that would still be $120. Do this four or five times a week, and that starts to blur the boundary between a side income and an actual full-time income.
Risk to Reward
If you have a risk to reward ratio of 1:2, then you can be wrong twice and right only once, but you won’t have lost any money. With that in mind, and using the above example, here’s where it gets really interesting. You could be wrong three times in a week and right only twice, but you’d still make $100. Maybe that doesn’t sound like a great deal, but an extra $400 a month is surely better than a loss. Alternatively, you could use a portion of your gains to build your account, which would theoretically increase the amount you could risk per trade (a maximum of 2% of your account) and in turn, your profit.
Be sure to check out Arty and this excellent video from his channel The Moving Average as he takes a look at the charts for EURUSD and explains the indicators he uses to show you how to get 20 pips a day.