The 20 Pips Challenge: How to Improve Your Trading Skills

Are you ready to test your trading skills and potentially boost your profits?

The 20 pips challenge is a great way to do just that.

In this blog post, we’ll delve into the ins and outs of the challenge and provide tips for success.

Whether you’re a seasoned pro or just starting out, this exciting and challenging strategy is worth considering.

What is the 20 Pips Challenge?

The 20 pips challenge is a trading challenge that involves making a profit of 20 pips on a single trade or within the same day.

The goal is to make 20 pips within a specific time frame, typically within a day, and to do so with a relatively small trading account.

The idea is that you are taking small profits and building confidence in your trading. Kind of like training for a marathon. You don’t immediately run a full marathon – your train by doing small runs like 5ks and 10ks.

These challenges are great for beginners because they are inexperienced to follow price action over a longer period of time, instead by trying this challenge – they can slowly – but conservatively grow their accounts over time.

This gives them incredible feedback on their skills, analysis, and risk management.

The challenge is popular among both beginner and experienced traders, as it can help improve skills such as risk management, discipline, and technical analysis.

The origins of the 20 pips challenge are somewhat unclear, but it has gained popularity in recent years thanks to online trading communities and forums.

Traders of all levels participate in the challenge, often sharing their experiences and strategies with others in order to learn and improve.

What the 20 Pips Challenge Achieves 

The mechanics of the 20-pips challenge are fairly straightforward.

To set up a trade with the goal of making 20 pips, traders will typically choose a currency pair and decide on an appropriate position size based on their trading account and risk tolerance.

They will then analyze the market conditions and use technical or fundamental analysis to determine their entry and exit points.

It’s important to note that the 20 pips challenge is not a guaranteed way to make money, and traders should always manage their risk carefully to avoid significant losses.

There are many strategies that traders can use to try to achieve the 20 pips target.

It’s important to find a strategy that works for you and to be flexible and adaptable as market conditions change.

Ideally, if you are just getting started you want to begin with the 10-pips challenge. This will help you build momentum and understanding of what it is like to trade in a live environment.

Pros and Cons of the 20 Pips Challenge

Here are some potential advantages and disadvantages to consider:

Advantages:

• Simplicity: The goal of achieving 20 pips per day is straightforward and easy to understand. This can make it easier for traders to focus on their strategy and execute trades with confidence.
• Potential for consistent profits: By targeting a relatively small profit of 20 pips per day, traders may be able to achieve consistent profits over time. This can be especially appealing for traders who are looking to make a steady, long-term income from trading.

Disadvantages:

• Risk of significant losses: While the goal of the 20 pips challenge is to achieve small, consistent profits, there is still a risk of significant losses. Market conditions can change quickly, and traders may experience losses if their trades don’t go as planned.
• Need for strict risk management: To mitigate the risk of significant losses, traders following the 20 pips challenge will need to practice strict risk management. This might include using stop-loss orders to limit potential losses, or limiting the amount of capital they allocate to each trad

Potential Strategies to Achieve 20 Pips per Day

There are several forex trading strategies that traders can use to target a potential 20 pips per day. Here are a few options:

1. Breakout trading: This strategy involves identifying key levels of support and resistance and waiting for a breakout to occur. When the price breaks through a key level, traders can enter a trade and aim to ride the momentum for a potential 20 pips or more.
2. Range trading: This strategy involves identifying a range-bound market, where the price is bouncing between two levels of support and resistance. Traders can enter a trade at one of the levels and aim to capitalize on the price moving back towards the other level for a potential 20 pips or more.
3. Trend trading: This strategy involves identifying a trend in the market and trading in the direction of that trend. Traders can use indicators such as moving averages or the Average Directional Index (ADX) to identify a trend and set their targets for a potential 20 pips or more.
4. Scalping: This strategy involves taking advantage of small price movements that occur frequently in the market. Traders using this strategy will typically hold their positions for a very short period of time, aiming to capture a few pips at a time. By executing multiple trades throughout the day, traders can aim to achieve a total of 20 pips or more.

It’s important to note that these strategies can be risky and may not always be successful. It’s crucial for traders to thoroughly research and test their strategies before implementing them in live markets.

Tips for succeeding in the 20 pips challenge

Here are some top tips for traders looking to succeed at the 20 pips challenge:

1. Have a clear plan: It’s important to have a well-defined trading plan that outlines your strategy for achieving 20 pips per day. This might include identifying key levels of support and resistance, selecting specific currency pairs to trade, and setting your entry and exit points.
2. Practice risk management: To minimize the risk of significant losses, it’s important to practice strict risk management. This might include using stop-loss orders to limit potential losses or limiting the amount of capital you allocate to each trade.
3. Use technical analysis: Technical analysis can be helpful in identifying key levels of support and resistance, as well as trends in the market. By using indicators such as moving averages or the Average Directional Index (ADX), traders can make more informed decisions about when to enter and exit trades.
4. Stay disciplined: The 20 pips challenge requires discipline and focus in order to execute trades effectively. It’s important to avoid letting emotions influence your decision-making and to stick to your plan even when market conditions are volatile.
5. Stay up to date on market news: It’s important to stay informed about economic and political developments that can impact the forex market. By staying up to date on market news, traders can make more informed decisions about their trades.

Conclusion

Overall, the 20 pips challenge can be a viable trading strategy for traders who are disciplined, focused, and willing to put in the time and effort to research and test their strategies. By completing the challenge, you’ll learn some of the core skills that a trader must possess that just cannot be taught in any course.

If you have succeeded with the 20 pips challenge, maybe try the 50 pips challenge.