The foreign exchange (forex) market is the largest financial market in the world, with a daily trading volume of over $6 trillion. In this market, traders can buy and sell currencies in order to make a profit. One of the most important metrics that forex traders use to measure their success is the number of pips they make each day. This article will explain what pips are and how many pips per day forex traders typically aim for.
What are pips?
Pips, short for “percentage in point,” are a unit of measurement used in forex trading to measure the change in the exchange rate of a currency pair. In most currency pairs, a pip is equal to 0.0001 of the quoted price. For example, if the EUR/USD currency pair is trading at 1.1200 and it rises to 1.1201, that is a one pip increase.
Pips are important because they allow traders to calculate their profits and losses in a standardized way. For example, if a trader buys EUR/USD at 1.1200 and sells it at 1.1300, they have made a profit of 100 pips.
How many pips per day do forex traders aim for?
The number of pips per day that forex traders aim for can vary widely depending on their trading style and risk tolerance. Some traders may be happy with just a few pips per day, while others may aim for 50 or more pips per day.
Scalpers, who trade on very short time frames and aim to make small profits on each trade, may aim for just a few pips per day. For example, a scalper who trades the EUR/USD currency pair may aim for 5-10 pips per trade.
Day traders, who hold positions for a few hours to a day, may aim for 20-30 pips per day. Swing traders, who hold positions for several days to a week, may aim for 50-100 pips per trade.
It is important to note that the number of pips per day that traders aim for should be based on their trading strategy and risk management plan. Traders should not aim for a certain number of pips just because they think it sounds impressive. Instead, they should focus on developing a strategy that works for them and aim for consistent profits over time.
Factors that affect the number of pips per day
There are several factors that can affect the number of pips per day that forex traders aim for. These include:
1. Trading style: As mentioned earlier, different trading styles require different numbers of pips per day. Scalpers may aim for just a few pips per day, while swing traders may aim for 50-100 pips per trade.
2. Risk tolerance: Traders with a high risk tolerance may aim for more pips per day than those with a low risk tolerance. However, it is important to remember that higher profits come with higher risk.
3. Market conditions: Volatile market conditions can make it more difficult to achieve a certain number of pips per day. Traders should adjust their strategy and risk management plan accordingly.
4. Trading platform: The trading platform used can also affect the number of pips per day. Some platforms may offer more opportunities for trades than others.
Conclusion
In conclusion, the number of pips per day that forex traders aim for can vary widely depending on their trading style, risk tolerance, and market conditions. Traders should focus on developing a strategy that works for them and aim for consistent profits over time. It is also important to remember that higher profits come with higher risk, and traders should always have a risk management plan in place.
