The 10-Pip Trading Strategy
BY Chris Andreou
|September 9, 2021Often, getting in and out of a trade after 10 pips is a lot easier than looking for big winners. It can sometimes be less stressful, too. And you’ll probably find far more methods online for grabbing 10 pips than you will for getting 100.
Before we go any further – remember, we’re a broker, not a financial advisor. Please use the information contained here responsibly, and make sure you read and understand the disclaimer at the bottom of this page!
The 10-Pip Strategy
You can alter a 10-pip strategy to fit different market conditions and for different currency pairs. 10 pips is not a hard and fast rule: it’s the beginning of an interesting strategy for beginner traders. You first aim for 10 pips, then:
- If the market moves in your favour 10 pips, move your stop loss to break even and target higher profits.
- Sometimes, exit the trade with 10 pips.
If you can do this when you’re first starting, there’s a good chance you’ll get a decent share of 10-pip winners, 20-pip winners, 20-pip losers, break-evens, and 30 – 100 pip winners. Let’s get down to the nitty-gritty.
A Defensive Approach
A 10-pip strategy is really a defensive approach that guards against other players in the market who are waiting to take pips off you, plus guards against the two headless horsemen of trading emotions: greed and fear.
The 10-pip strategy means you don’t try to take a ton of money off each trade, and you never try to exact revenge.
Instead, the 10-pip strategy calls for setting up a good trade with lots of potential, and then shooting for 10 pips as an initial target. Only 10, that’s it. If that’s all she wrote for the day, then you can get out. And in other instances, you can try for more than 10. But you need to hit that first 10 as a checkpoint.
Is 10 Pips Per Day Worth It?
For now, let’s assume that it’s enough to get 10 pips and that it’s okay to get out of the trade, or even get out for the day, at 10 pips. When you learn that it’s possible to turn $10,000 into $130,000 in a year by earning 10 pips a day, you’ll discover that it no longer makes sense to sabotage yourself by getting greedy on a single trade or hit back at the market when you suffer a 20 pip stop-loss.
Now, we’re not promising that you can turn $10,000 into $130,000 in a year – but it’s certainly possible, and traders have done it before.
Using this strategy, you’re not only going to take money off beginner traders in the market, but you’re also going to take money off advanced traders. Advanced traders want big money, high returns. They aim for 40, 50 or 100 pips at a bare minimum. Advanced traders are careful with capital because when you’re waiting for a hundred-pip gain, you give the market plenty of time to swing against you in a big way.
Advanced traders will think other traders are nuts for getting out at 10 pips – but you should never, never be displeased with 10. You should be thankful for any profit the markets return to you. Don’t spend any time worrying about how much you could have gotten. If you want to do that, you can do it next time. Here’s how…
How To Take More Than 10
Let’s say that you find a great opportunity to go for 10 pips on a trade. You submit a market order to buy EURUSD at 1.1990. You set your stop loss at 1.1970 (20 pips). You are now long on the euro versus the dollar.
When the price reaches 1.2000, you have earned 10 pips. Now, you can either exit the trade with your profit or stay in the trade for longer. Here is how you can stay in the trade:
Move your stop loss to break even. In this case, you’d move your stop loss up to 1.1990, your point of entry. This means if the price falls back to the rate you got in at, your trade automatically closes and you lose nothing. You gain nothing, too. You’ve traded defensively.
But if the trade continues to 1.2020 and beyond, you’ll get more than your initial 10-pip target. You can’t lose anything at this point, you’re in a 100% risk-free trade. Now you can let your profits run if you think there are higher achievable targets.
Why would you accept a break-even trade? Because potentially out of 10 trades, you’ll get 5 break-evens, 2 losing trades of 20 pips, 1 winner of 10 pips, and another winner of 50 pips. That’s called winning, and that’s what trading defensively does for some traders.
The rule is not to always move your stop and aim for more. Get out with 10 pips at any time you want. It’s more than okay to take a 10-pip profit, and some traders get out for 10 pips of profit more than 90% of the time. But the option is there to target higher profits when you think it’s achievable.
So is the 10-pip trading strategy suitable for you? Maybe, maybe not. It’s one of the options available to you – but you’ll need to dedicate yourself to learning how to trade intelligently.
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