So you are looking for a trading strategy that can help you generate so many pips in a day, right? There are so many forex trading strategies that can help you achieve your goal. In this post, we have shared the list of top 10 forex strategies generating 100 pips a day. Before we go through the strategies, let’s talk about pips.
What is a Pip in Forex?
If you are a newbie, the chances are you might have heard about this term but not sure what actually it means. A pip means the unit of measurement which expresses the change in value between two currencies. The pip is the last decimal place of the price quote.
A pip is a very minimal measure of the change in the currency pair in the forex market. Talking about US dollars, the pip is normally $0.0001. This very small measure of the change in the currency helps to avoid great losses for the investors.
What is a Forex Trading Strategy?
A forex trading strategy is a system used by forex traders that determine when to buy and sell the currency pair. There are different kinds of forex trading strategies out there. A good trading strategy is the one which allows a proper market analysis and considers risk management aspects.
How to Choose the Best Forex Strategy?
Choosing the perfect forex trading strategy is very important. Selecting the right trading strategy ensures that your trades won’t lose. The reason why most people fail in this market is that they follow the trading strategy that has not been tested or proven.
Before selecting a particular trading strategy, the trader needs to be clear about his or her goals. And, before creating a strategy, it is essential to understand the need for strategy. You need to figure out how one forex trading strategy is better than another. The major reasons behind forex trading loss are – hedging and speculation.
The forex trading strategy could be manual or automated. In a manual trading strategy, the forex trader spends time in front of the computer and figures out the best strategy. In the automated strategy, the trader develops an algorithm suitable for trading signals.
Top Forex Trading Strategies
There are various trading strategies out there. In order to achieve the target of 100 pips a day, make sure you follow the correct strategy. Here are the top forex trading strategies:
1. Price Action Strategy
Price action forex trading strategy is the strategy in which the trader makes the trading decisions based on the price movement. Price action trading strategy is one of the best and effective trading strategies out there. If you are a day trader, a price action strategy could be a good one for you.
Under the price action strategy, factors like charts, trend lines, bars, price bands, and other technical stuff are used depending upon the trading strategy. With this forex trading strategy, you will not be using indicators or any methods. The major focus of a price action strategy trader will be on the price.
The trader will use the historical pricing movement in order to take forex trading decisions. The best thing about this trading strategy is it will not require so much research time once you are familiar with it. The major downside of price action is it can’t be automated. In order to trade with price action strategy, you have to constantly keep an eye on the price movement. It means you can’t rely on a forex trading robot for automating price action strategy.
2. Range Trading Strategy
The range is another forex trading strategy in which the forex trader has to find out support and resistance areas. Under the range trading strategy, you need to sell when the price is high and buy when the price is down. The top of the range given the resistance and the bottom of the range gives the support.
In order to have a successful trade, it is important to properly measure support and resistance. Through the range trading, the trader has to figure out the ideal points where support and resistance will hold again. There are various types of range types – rectangular range, diagonal ranges, false channel breakouts, continuations ranges: flags, pennants, wedges, and irregular ranges.
In this trading strategy, you need to follow three major steps – identify the range, set up your entry, and manage the risk. With the range trading strategy, you can make great profits but it may lead to losses when the market condition changes. Hence, it is important to manage the risk when this strategy is implemented. In this method, there is no trading length has been set. But, it is essential for the trader to focus on risk management.
3. Trend Trading Strategy
Trend trading strategy is the best and simple forex trading strategy out there. Under this strategy, the forex trader understands the market momentum and trades accordingly. In order to get the most from this strategy, technical indicators are used to understand the price momentum. Trend trading is all about forecasting the market conditions based on historical trends and price movements.
There is no timeframe for a particular trend. The trend trading strategy is considered a long-term forex strategy. It is solely based on how long does a particular trend lasts. With the help of a trend trading strategy, you get to know about the trend early. By knowing the trend early, you get an idea about when to enter and exit the market. Hence, identifying the market trend is very important.
There are three main types of market trends – uptrends, downtrends, and sideways trends. When the market price is constantly increasing, it is known as an uptrend. When the market price is declining, it is known as a downtrend. And, when the market price is neither increasing nor decreasing, then it is known as a sideways trend. Utilizing trend trading could be a good strategy for generating 100 pips a day.
4. Breakout Strategy
Breakout forex trading strategy can also help you generate huge pips. The breakout strategy is ideal when a particular forex pair overpowers and breaks out. While implementing a break out strategy, the important things to consider are support and resistance levels. The goal of this strategy is to enter the market during the price breakout. The trader will continue to trade in such a market until the price volatility will die.
Breakout trading strategy is a popular one because it is simple. This trading strategy gives amazing trading opportunities. The market reaches to new prices and trends. While implementing this strategy, the trader should understand the difference between breakout and fakeout. The trade may go wrong when the trader enters the market without making sure whether its real breakout or its fakeout.
The trader should also need to have a plan for exits. A successful breakout strategy trader is the one who has an idea about when to exit the market. When you plan to implement a breakout strategy for forex trading and enter the market, you will have three plans for an exit – exit with a profit, exit with a loss, and setting a stop order.
5. Position Trading
Position forex trading is another popular strategy that can help you generate a great number of pips. Under position forex trading, the trader holds the position for a longer period of time. In position trading, the trader is very less concerned about short term fluctuations in the market. The main motive of the trader will be to hold the position for the long term with the expectation of appreciation in price.
Talking about the length of trade under this trading strategy, the trading length is for the long-term (it isn’t fixed). The trade length could be of a few weeks, months, or even years. The position forex trader invests when the trend starts. They believe that after the trend starts, it is likely to keep growing.
Because the trader has to hold the position for the long-term, the trading strategy is ideal for long-term investors, who can afford to invest their money for a longer period. For the perfect strategy, the trader may use fundamental analysis, technical analysis, or a combination of both. Apart from this, the trader may consider market trends, macroeconomic factors, and historical patterns.
6. Scalping Trading Strategy
As we have seen, in position forex trading strategy, the trader has to invest the money for a long period of time. We can say scalping is the opposite of position trading. In scalping trading, the trader has to make a profit through small price changes in the market. Scalping trading strategy requires to have proper entry and exit strategy.
Executing the wrong entry or exit strategy under scalping trading could result in a huge loss. Not everyone has mastery in scalping. Mastering this trading strategy requires great discipline. As we know forex is constantly changing market, the market price could vary at any time hence it is very important to have a trading focus.
As the market does not volatiles greatly in a short span of time, the scalping strategy would have a comparatively lower risk factor. The best thing about this strategy is the smaller moves can be easily obtained. You can use a scalping strategy with an Oscillator, Stochastic Oscillator, Stochastics & Bollinger Bands, or Support & Resistance.
7. Day Trading Strategy
Day trading is another popular forex trading strategy. A day trader trades his or her financial instruments within the same day. Day trading is not just in the forex market, it is can be taken place in any market whether it is stocks, commodities, or any other. Mostly, it is seen either in the forex market or the stock market.
Unlike other trading strategies, in day trading, the trader does not hold the trade overnight. Day trading strategy might seem profitable. But to get the most out of this, you need to have a great knowledge of the market and sufficient capital. In order to win the game with day trading, the forex trader has to spend a great time analyzing and monitoring the market conditions. The good thing about this strategy is you are not holding the trades for the long term, even not for a few days.
In a nutshell, the day forex trading strategy is ideal for traders who have sufficient time to analyze and monitor the market. It is ideal for traders who don’t want to hold the trades for long-term and like to trade within the day. And, it is for those who want to know whether they will win or lose at the end of the day. Day trading can be a great trading strategy when it is done by a knowledgeable and experienced trader.
8. Swing Trading Strategy
Under the swing trading strategy, the trader focuses on earning smaller gains in short term trends. The time duration of the trade could range from a few days to a few weeks. The returns from swing trading might be very smaller, but when the compounding is affected, it turns out to be good returns in the long-term.
Instead of targeting for big returns like 20% or 25%, the swing trader targets for around 10% or 15% returns. In this strategy, the goal of the trader is not to hold the position for weeks or months. The average trade length of the swing trade is somewhere between 5 to 10 days. By implementing a swing trading strategy, you can gain many small wins, which ultimately results in bigger returns.
People often get confused between day trading and swing trading, but both of them are different in many ways. One of the major differences in the time frame. Under day trading, the trader does not hold the position overnight. They sell the positions within minutes or hours. On the flip side, under swing trading, the trader holds the position for over days or weeks.
9. Carry Trade Strategy
This one is another trading strategy through which you can generate a great number of pips. t is one of the most popular forex trading strategies. Carry trade is the strategy in which you make money from interests. In this trading strategy, the trader borrows a particular currency and use it for buying another currency.
Carry trade strategy is totally based on the interest rates of different currencies. It is affected by various political and economic factors. Talking about trade length, in the carry trade, the length of the trade is based on the interest rate fluctuations of the two currency you are trading. The length could vary from weeks, months or years.
Because this strategy is highly based on interest rates. The perfect time to enter the carry trade strategy is to enter when the central banks are increasing the interest rates. When there is a reduction of interest rates, your returns would be decreased. Though it is a very popular trading strategy in the forex market, the biggest risk is interest rate fluctuations. If there becomes a reduction in interest rates, the trader has to suffer from big losses.
10. Grid Trading Strategy
Grid trading is another great strategy for generating a great number of pips every day. The best thing about the grid trading strategy is it requires some forecasting. Apart from this, automating this strategy becomes easy with good software. The chances of suffering huge losses become high when the stop loss is not been set properly.
Under the grid trading strategy, the first thing you need to choose is the instrument. Make sure you don’t use more than one instrument because it can be risky. Under this method, stop loss and take profit play a crucial role. Hence, make sure you set them in advance. These two help you to stop losing your money after reaching at a particular point and get all the money in after reaching at a particular point.
In a nutshell, the grid trading strategy is all about placing an order above and below a set price. The best thing about this strategy is it can be easily automated. You do not have to spend long hours working in front of your computer screen.
Generating around 100 pips a day might seem difficult. But, when you have a proper plan and trading strategy, it is possible to do it. The main reason why most traders can’t generate enough pips and fail in the market is due to the lack of an ideal trading strategy. Following the wrong strategy will result in huge losses.
In order to win your game in forex, it is essential to follow the right forex trading strategy. Choosing the perfect forex trading strategy is very important. Selecting the right trading strategy ensures that your trades won’t lose. Here we have shared the list of top 10 forex trading strategies. With these trading strategies, you can generate around 100 pips a day.
The pips and trades won’t always be there as market conditions change all the time. So don’t jump in a trade unless all criteria is met for your strategy. You also don’t need to make 100 pips. If you can make 2% on 100 pips why not make 2% on 10 pips with the same risk to reward ratio. That is one of my trading strategies using the New Paradigm taught by Steve Gregor.