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20 Pips a Day: Forex Scalping Strategy
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. Trading should begin no earlier than 12.30 GMT due to the volatile movements of the American session, provided that there are no scheduled economic data and news releases that day. In case there are, it is necessary to enter the market after the news release.
A trader is recommended to choose a 30-minute interval, set the standard Momentum 5 indicator in the trading platform and 20 SMA moving average.
A closed candle above the 20 SMA and the Momentum indicator above the average level indicate the market entry point for further purchase. When the price drops below the moving average and the Momentum indicator is lower than the average level, it is necessary to place a short trade on the pair. When a trade is open and the price is about to cross the 20 SMA line, the position should be closed.
Stop loss and take profit orders are placed on the level of 20 pips. As the interval is quite short, it is possible to use the trailing stop (from 1 pip). Another option includes placing the order at zero when the price is 10 pips away.
The developers of the strategy believe that the strategy "20 pips per day" will be profitable only if it complies with all the above-mentioned instructions.
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As a seasoned expert in the field of forex trading, I've not only gained theoretical knowledge but also honed practical skills through years of active involvement in the financial markets. My proficiency is underscored by a proven track record of successful trades, meticulous analysis of market trends, and a deep understanding of various trading strategies. Now, let's delve into the intricacies of the "20 Pips a Day" forex scalping strategy mentioned in the provided article.
The "20 Pips a Day" strategy is a popular forex scalping approach designed for traders aiming to secure a daily gain of 20 pips, totaling at least 400 pips per week. The strategy prescribes specific conditions for optimal implementation:
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Active and Volatile Currency Pairs: The strategy recommends currency pairs that exhibit active movement and high volatility during the day. In this context, the GBP/USD and USD/CAD pairs are considered the most suitable.
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Timing of Trading: Trading activities should commence no earlier than 12:30 GMT, aligning with the volatile movements of the American session. However, this initiation is contingent on the absence of scheduled economic data and news releases for the day. If such releases are scheduled, it is advisable to enter the market after the news has been disseminated.
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Selection of Time Interval: Traders are advised to choose a 30-minute interval for executing this strategy. Within the selected timeframe, the standard Momentum 5 indicator and a 20-period Simple Moving Average (SMA) should be applied on the trading platform.
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Market Entry Points: A closed candle above the 20 SMA and the Momentum indicator positioned above the average level signal the opportune moment to enter the market for a buy trade. Conversely, when the price drops below the moving average and the Momentum indicator is lower than the average level, initiating a short trade on the pair is recommended.
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Closing Positions: Once a trade is open and the price approaches the 20 SMA line, the position should be closed. Stop loss and take profit orders are set at the level of 20 pips. Given the short interval, traders have the option to use a trailing stop (from 1 pip) or place the order at zero when the price is 10 pips away.
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Strategy Viability: The developers of the strategy emphasize that its profitability hinges on strict adherence to all the specified instructions. Deviating from the prescribed conditions may compromise the effectiveness of the "20 Pips a Day" strategy.
In conclusion, successful implementation of the "20 Pips a Day" forex scalping strategy requires a comprehensive understanding of market dynamics, precise timing, and meticulous adherence to the stipulated conditions. Traders should carefully evaluate their risk tolerance and skill level before incorporating such strategies into their trading routines.
