100 Pips Per Day Trading Strategy Explained

Oddly enough, people seem to be attracted to large, round, psychologically significant numbers. This can break down into several different increments, but for this example we will use 100 pips. Longer-term traders can also look at 500 pips, 250 pips, etc.

Looking at the attached USD/CAD hourly chart, you can see that the market does tend to react to large, round, psychologically important numbers such as the 1.27 level, the 1.26 level, and so on. That is exactly what this system exploits: the proclivity of large funds to use large, round, psychologically significant numbers to enter into the market as they have huge amounts of positions to deploy. Also, the options market has a massive effect on how the spot market will move, and that is reflected in the large, round numbers as options are normally priced at them.

As you can see, I also have a moving average attached to the chart, and we had an impulsive candle during 1 August that broke above the 1.25 level as the moving average shot higher. That impulsive candle led the market towards the 1.26 level where we pulled back. The trader simply enters the market at the close of the candle, puts a stop loss underneath the large, round, significant number that we have just broken, and the names for the next one. It really is that simple, and if we have any type of trend going, it does work over time.