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50 Pips A Day Forex Strategy

by Laurentiu Damir (2012)

Quick summary -- an in-depth PhD-level extended summary (10-30 pages) for this book is coming soon.

50 Pips A Day Forex Strategy

Author: Laurentiu Damir | Categories: Forex, Day Trading, Price Action

Executive Summary

"50 Pips A Day Forex Strategy" by Laurentiu Damir is a compact forex trading guide that presents a price-action-based trading system designed to capture 50 pips per day from currency markets. Damir strongly advocates for trading on higher timeframes (4-hour and daily charts) as the primary approach, using price action analysis (trends, support/resistance, Fibonacci retracements, and price patterns) rather than traditional technical indicators. The only indicator he endorses is the 200 EMA (Exponential Moving Average), used purely as confirmation of price action readings. The book covers system construction principles, the specific 50-pips strategy, money management with position sizing, and common trading mistakes to avoid. Damir is also the author of several other price action trading books including "Trade the Price Action" and "Follow Price Action Trends."

Core Thesis & Arguments

Damir's central thesis is that price action itself is the only reliable "indicator" in forex trading, and that all traditional technical indicators are lagging and ultimately harmful to trading results. Key arguments: (1) Technical indicators like MACD, RSI, and Stochastic are constructed from past price data and therefore always lag behind price, making their signals too late to be useful; (2) The only tools a forex trader needs are price trends, support and resistance levels, Fibonacci retracements, and price/candlestick patterns; (3) Higher timeframes (4-hour and daily) are significantly more reliable and profitable than shorter timeframes; (4) The 200 EMA is the only moving average worth using, and only as confirmation of price action direction; (5) Money management through proper position sizing and risk-reward ratios is more important than the specific entry method; (6) New traders should avoid day trading entirely until they can trade profitably on higher timeframes.

Chapter-by-Chapter Analysis

System Construction

Covers the decision-making process for building a trading system: choosing a timeframe, selecting technical tools, and understanding why price action components (trends, S/R, Fibonacci, patterns) are superior to indicator-based approaches.

Price Action Components

Details each core component: how to identify and trade trends using price action alone, how to draw and use support and resistance levels, how Fibonacci retracement levels act as strong bounce zones, and how price patterns and candlestick patterns serve as trade confirmation signals.

Why Not Indicators

Makes the explicit case against all technical indicators except the 200 EMA, arguing they are lagging, give contradictory signals, and create a false sense of security. Warns against back-testing illusions where indicators appear to work historically but fail in real-time.

The 200 EMA and Higher Timeframe Context

Explains the 200 EMA's role as a trend confirmation tool and the importance of aligning trades with the dominant trend on the next higher timeframe.

Money Management

Covers position sizing, risk-reward ratios, stop loss placement, and the critical importance of not risking more than a small percentage of account equity per trade.

Common Mistakes and the 50-Pip Strategy

Addresses cutting profits short, letting losses run, revenge trading, and ignoring higher timeframe context. Presents the specific components and rules of the 50-pips-a-day strategy.

Key Concepts & Frameworks

  • Price Action Supremacy: Price leads all indicators; therefore, trade the price directly
  • Higher Timeframe Priority: The 4-hour and daily charts produce more reliable signals than lower timeframes
  • The 200 EMA as Sole Indicator: The most widely watched moving average, used only as confirmation
  • Fibonacci as Price Magnets: Retracement levels act as strong support and resistance zones
  • Anti-Indicator Philosophy: All traditional indicators are inherently lagging and ultimately counterproductive
  • Daily Pip Target: A structured approach to consistent daily profit goals

Practical Trading Applications

  • Trade primarily on 4-hour and daily charts, using lower timeframes only when no setups are available
  • Identify the trend direction using price action (higher highs/higher lows or lower highs/lower lows)
  • Confirm trend direction with the 200 EMA on the same timeframe
  • Enter trades at support/resistance levels, Fibonacci retracement levels, or on price pattern completions
  • Always trade in the direction of the higher timeframe trend
  • Set stop losses below support (for longs) or above resistance (for shorts)
  • Target a minimum 1:1 risk-reward ratio, preferably higher
  • Risk a maximum of 1-2% of account equity per trade

Critical Assessment

Strengths: The book's emphasis on price action over indicators is well-reasoned and aligns with how institutional traders approach markets. The advice to start on higher timeframes before attempting day trading is pedagogically sound. The book is concise and actionable, avoiding the information overload that characterizes many trading books. The money management guidance is practical and appropriately conservative.

Weaknesses: The absolute dismissal of all technical indicators is overly dogmatic - many professional traders use indicators effectively as supplements to price action analysis. The "50 pips a day" promise in the title is marketing-driven and may create unrealistic expectations. The book lacks statistical evidence for its claims and provides no formal backtest results. The brevity that is a strength also means that many concepts are treated superficially. The writing quality is uneven, with occasional grammatical issues.

Key Quotes

  • "Do not use any technical indicators in your trading because they are absolutely worthless."
  • "Price leads the indicator, not the other way around."
  • "Always seek to trade on the higher time frames."
  • "The ultimate indicator is and always will be the price action itself."

Conclusion & Recommendation

"50 Pips A Day Forex Strategy" provides a useful framework for beginning forex traders who want to build a system around price action rather than indicators. Its core principles - trading higher timeframes, following the trend, using Fibonacci and support/resistance - are sound and widely validated. However, readers should approach the anti-indicator dogma and the daily pip target with skepticism, as both represent oversimplifications of complex realities. Recommended as a starting point for forex beginners, but should be supplemented with more comprehensive education on risk management, market microstructure, and the limitations of any single approach.