Setting Realistic Pip Targets: How Many Pips Per Day?

How Many Pips Should Be Targeted Per Day?

Unrealistic Pip Targets

Many forex traders aim to collect a specific number of pips each day, believing this will lead to consistent profits. However, targeting a fixed amount of pips daily is unrealistic due to the unpredictable nature of the market and can lead to several complications.

The Professional Approach to Pips

Professional traders do not focus on achieving a specific number of pips per day. Instead, they rely on well-defined strategies that adapt to market conditions. The number of pips gained varies depending on the strategy and individual goals. For example, scalping targets frequent small profits, while position trading aims for larger gains over longer periods.

The Pitfalls of Setting Daily Pip Targets

Setting a daily pip target often leads to trading more during unfavourable conditions and less during optimal times. This misalignment can result in missed opportunities and increased losses. For example, if a trader meets their pip goal early in the day, they might miss out on more profitable trades later. Conversely, striving to meet a pip target in adverse conditions can lead to overtrading and revenge trading, both of which are detrimental to long-term success.

How Many Pips Do Professional Traders Make?

Variability in Pip Gains

Professional traders do not operate with a fixed number of pips in mind because market movements are unpredictable. The number of pips gained daily varies based on the adopted strategy and individual goals. Some strategies, like scalping, focus on smaller, more frequent profits, while others, such as position trading, aim for larger gains over longer timeframes.

Unrealistic Expectations of Daily Pip Targets

Traders must accept that not all trades will yield positive returns. Trying to achieve a daily pip goal is often a setup for failure. This approach encourages trading more during ineffective periods and less during effective ones, which is counterproductive. For example, if a trader places quick trades in the morning and hits a specified pip goal, they might miss out on additional opportunities in ideal market conditions later in the day.

Focus on a Winning Strategy

The Importance of Strategy Over Pip Targets

Rather than focusing on earning a specific number of pips per day, traders should concentrate on what can be controlled: diligently following a set strategy without emotion or hesitation. Once a strategy is formulated, the key is its flawless execution.

Avoiding Overconfidence and Revenge Trading

Sticking to a plan means not getting overconfident after successes and not shying away from trades after losses. Revenge trading, driven by the need to recoup losses, often results in overtrading and further losses. Confidence in the strategy is crucial; the outcome of each individual trade should not matter as long as the strategy is sound.

Practical Example: EUR/USD in Unfavourable Conditions

Consider a trader using a moving average crossover strategy on the EUR/USD pair, targeting 20 pips per trade. In unfavourable market conditions, this strategy can lead to multiple unsuccessful trades. The red circles indicate unsuccessful trades, while the green circles represent successful ones. This highlights the futility of rigid pip targets in varying market conditions.

Pips vs. Profitable Trading

Realistic Goals and Consistent Execution

Chasing a specific number of pips per day is an unrealistic goal due to constantly changing market conditions. Instead, traders should set goals for controllable factors, such as following a strategy and executing it consistently. Starting with a risk-free demo account with real-time pricing data can help develop and refine these strategies without the pressure of real money on the line.

Final Thoughts

Achieving consistent profitability in forex trading requires a disciplined approach focused on strategy execution rather than arbitrary pip targets. By understanding and adapting to market conditions, traders can develop a sustainable trading practice that prioritizes long-term success over short-term gains.