It would seem to make sense that you would try to make as many pips as possible. So in answering the question “how many pips should I try to make in a day”, it seems obvious that you would aspire to make as much as you can.
However, you need to be realistic with your goals, as the number of pips you can make in a day will depend on the following:
- Risk management profile of your account
- Your account size
- Assets traded
- Time of trade
- Profit targets for the month
Let us see how each of these factors may affect how many pips you may make in a day.
1. Risk Management
Your exposure to the market should not be more than 3% at any given time. Some try to make as many pips as they can and then decide to leave multiple trades open. Invariably, they break this rule and get themselves overexposed. So you see a situation where a trader who should ideally be targeting 100 pips a day, trying to make 500 pips by setting multiple trades all at once. It is better to set trades one after the other and stay within limits of risk than setting all at the same time.
2. Account size
This has a bearing on risk management. Recall what we said about setting multiple trades? A trader with $20,000 capital can afford to set several trades at the same time so as to make hundreds of pips a day. The same cannot be said of a trader with just $500.
3. Assets Traded
If you trade the highly liquid EURUSD pairing, it may be better to target between 70 and 100 pips a day. This is because this is the average daily range of movement for this asset. In contrast, trading an asset like crude or gold may deliver thousands of pips in a trading day. So you may target to make 1,500 pips trading gold in one day. However, you need a deep pocket to trade an asset like gold, which takes us back the account size and risk management.
4. Time of trade
Trying to make hundreds of pips when the market has just opened for the week, during public holidays or when the market is shutting down for the week on Friday night may be foolhardy. There is not enough volatility during those periods. But if you target to make hundreds of pips during the London-New York overlap time zone, this is a realistic target. So the time of trade may actually determine how many pips that you can target to make in a day.
5. Monthly Profit Targets
How many pips a trader decides to target in a day may also be worked out from the monthly profit targets. A trader may decide to make 20% profit for the month on a capital of $5,000. 20% of that amount is $1,000, which is spread over 20 trading days a month. Let us assume the trader decides to trade only on 10 days out of 20 – that would translate to a target of $100 per day.
The next point in this calculation is to work out the trade size to be used to try to deliver $100 a day. Trading on 1 mini-lot, this is a target of 100 pips per day. If the trader were to use 0.4 lots (4 mini-lots), that would be 25 pips per day. Even if the trader were to target 100 pips per day, this number could be split into 4 trades of 25 pips per day.
Conclusion
Realistically speaking, every trader may decide how many pips they want to target in a day. There is no fixed figure. However, the parameters discussed above may be used to develop more rational targets.
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