There is n number of strategies on the internet today. But there are only a few that works well.
Every single pip matters in trading. In this strategy, we will see how we can make 30 pips in a day. Making pips in a volatile currency pair is a bit easy as compared to a non-violate pair. Therefore, we call this strategy 30-pips-a-day.
30-pips-a-day is a trading strategy used with volatile currency pairs like GBP/JPY, GBP/USD. That is because this strategy requires a vast space for trading movement to obtain the required profit margin. Also, volatile currencies often provide more precise market reversal points. The timeframe used in this approach is 5 min.
Indicators used: we will be using two indicators in this strategy.
- 10-period Exponential Moving Average
- 26-period Exponential Moving Average
You can use this in any platform, whether a brokers chart or even on trading view.
10-day and 26-day exponential moving averages (EMAs) are often the most quoted and analyzed short-term technical indicator. Graphically, you find it as a trend line on the price chart representing the averages of the closing prices of the last ten trading days whereas, 26-day EMA represents the averages of the closing prices of the last 26 trading days.
How to use 30-pips a day indicator:
The first thing to do is to clearly define the market trend, and for that, we will use the crossing of EMAs. So, for example, if the 10-EMA crosses the 26-EMA bottom-up and continues rising, it signifies an uptrend.
If the 10-EMA crosses the 26-EMA upside-down and continues falling, it means the market has to go down, and it’s a sell.
Opening and closing trades
Opening a trade using the indicator does not take much effort but surely take some attention. We will take the trade only when the 10-EMA crosses the 26-EMA. Whether to take a BUY or a SELL will depend on the way how 10-EMA crosses the 26-EMA.
After defining the trend, we will wait for the price to follow the direction indicated by the EMAs as described earlier.
We will then wait for a correction against the observed trend. Finally, we will patiently confirm and open a position at the high/low of this retrace. Here, it is important to have at least some knowledge of candlestick patterns. In addition, knowledge of price action will add more value and help make the prediction more accurate.
Below are the examples.
On the M5 chart of GBPJPY, we can see a downtrend. To get more confirmation, we see that the 10-EMA has crossed the 26-EMA upside-down. Now when we have 2 confirmation, we can also see after the EMAs crossed each other, they continue going down. Therefore, we decide to sell on the falling trend.
However, as discussed earlier, we do not sell immediately after the EMA crosses each other. Instead, we will wait until the price moves up in a correction to reach at least the middle point between the two EMAs and then we will place a sell order.
We should place the stop loss 15-20 pips above the sell order level. Thus, the take profit is 30-40 pips.
We will apply the same logic while taking a long position.
Here on the M5 chart of GBPJPY, we can see we have a clear uptrend. Also, the 10-EMA has crossed the 26-EMA bottom-up and continued rising. Therefore, It is an indication of a BUY signal. However, as already discussed, we will not enter the buy immediately. Instead, we will wait until the price moves down for a correction to reach at least the middle point between the two EMAs. So now we place a buy order.
Note: in this scenario, the price not only moved down to the middle point between the EMAs but dropped even lower – that is also acceptable. The idea here is to confirm that the retrace is significant enough to give maximum gain until the take-profit is activated.
We should place the stop loss 15-20 pips below the buy order level. The take profit is 30-40 pips away.
As always, we must keep in mind; we must not use any strategy or indicator alone. It’s
always better to use an area of confluence or price action.
As we can see, the Take Profit and Stop Loss levels are a fair distance from the position opening level. That is why the currency pair’s volatility is required to reach these levels and make the strategy work.
However, On the other hand, this method may be considered relatively risky for the same reason. The Take profit (30-40 pips) and Stop Loss (15-20 pips) ratio is 1 to 2. The traders must keep in mind to follow the right risk and money management.
Concluding, we can say that 30-pips-a-day is an interesting and aggressive strategy to make a good profit with each trade. It is easily used but requires a good nerve. Nevertheless, cross-checked with standard trend analysis may be a good tool in a trader’s arsenal.