Forex trading is a lucrative investment opportunity that has gained massive popularity over the years. It involves buying and selling different currencies in the hope of making a profit from the price fluctuations. It’s not uncommon for traders to aim for small profits, such as 10 pips, as they can quickly add up over time. In this article, we’ll explore how to make 10 pips in forex.
What are pips in Forex?
Before we delve into how to make 10 pips in forex, let’s first understand what pips are. A pip (short for “percentage in point”) is the smallest unit of measurement used in forex trading to represent the change in value between two currencies. It’s usually the fourth decimal place in most currency pairs, except for those that include the Japanese yen, where it’s the second decimal place.
For example, if the EUR/USD pair moves from 1.1011 to 1.1021, that’s a move of 10 pips.
How to make 10 pips in Forex
Now that we know what pips are let’s dive into how to make 10 pips in forex. It’s essential to note that there is no one-size-fits-all strategy when it comes to forex trading. Different traders use various tactics to make profits. However, the following are some of the common ways to make 10 pips in forex.
1. Scalping
Scalping is a popular forex trading strategy that involves making small profits frequently. It’s a technique that relies on quick trades that aim to capture small price movements. Scalpers usually hold their trades for a few seconds or minutes, making it possible to make multiple trades in a single day.
To make 10 pips using scalping, a trader would need to make several trades, each targeting a small profit of 2-3 pips. If a trader makes four trades, each with a profit of 2 pips, they would have made a total of 8 pips. However, this strategy requires a lot of discipline and a reliable trading plan.
2. Day trading
Day trading is another popular strategy that aims to make small profits over a day. Unlike scalping, day traders hold their trades for longer periods, usually up to a day. Day traders usually rely on technical analysis to identify potential trading opportunities.
To make 10 pips using day trading, a trader would need to identify a currency pair that’s likely to move by at least 10 pips in a day. They would then enter a trade and set a stop-loss order to minimize losses in case the trade goes against them.
3. Swing trading
Swing trading is a strategy that involves holding trades for a few days or weeks, aiming to capture the larger price movements. Swing traders usually use both technical and fundamental analysis to identify potential trading opportunities.
To make 10 pips using swing trading, a trader would need to identify a currency pair that’s likely to move by at least 10 pips in a few days. They would then enter a trade and hold it until they achieve their target profit.
4. News trading
News trading involves trading based on the news and economic data releases that affect the forex market. Traders usually monitor the economic calendar and enter trades just before or after an important data release.
To make 10 pips using news trading, a trader would need to identify an upcoming news event that’s likely to affect a currency pair by at least 10 pips. They would then enter a trade just before the news release and aim to capture the price movement that follows.
Conclusion
Making 10 pips in forex requires discipline, patience, and a reliable trading plan. Traders can use various strategies, including scalping, day trading, swing trading, and news trading, to achieve this goal. However, it’s essential to note that forex trading is risky, and traders should only invest what they can afford to lose.
