How To Make 20 to 100 Pips A Day in Forex Trading?

What are pips in Forex trading?

Practically, a pip represents one-hundredth of one percent (1/100 x 0.01) and typically resides in the fourth decimal place of a currency pair's price quote (e.g., 1.1234 vs. 1.1235). When the Euro shifts against the Dollar by 0.0001, that equates to one small pip.

However, the impact of these subtle market movements should be considered. Accumulate pips strategically through trades, and you'll observe your capital growing steadily over time.

The picture below helps you understand what 5.1 pips looks like on the chart of the GBP/USD currency pair:

What 5,1 pips looks like the chart of the GBP/USD currency pair

That is, trading with a minimum lot of 0.01 you can get 58 cents of profit from a small movement of more than 5.1 pips. Such fluctuations can take only a few minutes.

By trading 1 lot and taking movements of 50 pips every day, you can earn approximately $500 per day.

What is 20 pips in Forex?

As mentioned, a pip represents the slightest price movement a currency pair can make, typically equivalent to 0.0001 or 1/100th of a percent. For instance, trading the EUR/USD pair and the price moves from 1.2000 to 1.2010 constitutes a 10-pip movement.

Regarding monetary value, the specific profit or loss per pip relies on your position's size. For example, trading one standard lot (100,000 units) of the EUR/USD pair makes each pip worth $10, while trading one mini lot (10,000 units) values each pip at $1.

What is 100 pips in Forex?

Targeting 100 pips daily in Forex may seem enticing, with a daily 1% profit as a step towards financial freedom. However, it's not a magical figure. Picture ascending 100 small steps in the market, each representing a 0.01% shift. Although individually modest, consistent gains can accumulate over time. Daily victories translate to a 7% weekly boost, a 30% monthly surge, or even a potential doubling of your capital within a year.

EUR/USD hourly volatility in pips

The picture above shows that during an active US session, the EUR/USD exchange rate can fluctuate within 25 pips per hour on average.

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How much can you make with 20 and 100 pips a day?

The potential earnings in the Forex market, particularly targeting 20 to 100 pips a day, depend on factors such as leverage, deposit size, and the number of trades executed. Let's explore three scenarios to illustrate possible outcomes:

1 Scenario 1: Conservative Approach

A trader employs a 1:10 leverage with a modest $1,000 deposit in this cautious strategy. Executing one trade per day, aiming for a 20-pip gain, the potential profit is calculated as follows:

Profit = (20 pips x 1 lot x $1) x 1 trade = $200

2 Scenario 2: Moderate Risk

Opting for a moderate risk level, the trader uses a 1:50 leverage and increases the deposit to $5,000. With three trades per day and an average gain of 50 pips, the potential profit becomes:

Profit = (50 pips x 1 lot x $1) x 3 trade = $1500

3 Scenario 3: Aggressive Strategy

The trader employs a higher 1:100 leverage for a more aggressive approach and boosts the deposit to $10,000. Engaging in five trades daily and targeting a substantial 100-pip gain, the potential profit is calculated as follows:

Profit = (100 pips x 1 lot x $1) x 5 trade = $5000

It's crucial to recognize that these calculations are simplified and don't consider transaction costs or potential losses. Real-world trading involves inherent risks, and success hinges on a well-crafted strategy and effective risk management.

For a comprehensive analysis and deeper insights into earning potentials, refer to the detailed article on - The 1% Daily Profit Myth in Forex.

Risk and benefits

What are the advantages and disadvantages of implementing the idea of making money on trading by taking movements of 20 to 50 or 100 pips per day?

Instructions to start making 20 to 100 pips

1 Step 1: Open Broker Account

The first step to initiating your trading venture is to open a broker account. You can consider the recommendations at Forex Brokers List — the Reliable & Licensed for a reliable and well-rated broker.

2 Step 2: Choose Your Strategy

Selecting a suitable strategy is paramount in forex trading. For insights into how the Pips Forex strategy operates, refer to this informative article - How does 50 Pips Forex Strategy Work.

3 Step 3: Try Trading on Demo

Before diving into actual trading, it's prudent to hone your skills and test your chosen strategy on a demo account. This allows you to familiarize yourself with the market dynamics without risking actual funds.

4 Step 4: Switch to Real

You can transition to real trading once you've gained confidence and proficiency through demo trading. Remember the principles of your chosen strategy and apply what you have learned to navigate the live market.

Common mistakes to avoid when trying to make 20 to 100 pips a day

Avoid these common pitfalls when aiming to make 20-100 pips per day in Forex trading:

• Overleveraging: Avoid overleveraging your account. Excessive leverage can lead to substantial losses on a single trade. Use leverage that aligns with your account size

• Excessive Trading: Trading too frequently to reach a specific pip target may result in overtrading. It can lead to higher transaction fees and poor decision-making. Exercise patience and wait for high-probability setups

• Lack of Trading Plan: A well-defined trading plan with precise entry and exit rules is crucial for consistent pip gains—trade based on your plan rather than succumbing to emotions

• Poor Risk/Reward Ratios: Aim for trades with favorable risk/reward ratios, with potential rewards at least twice as large as the risk. This strategy contributes to positive expectancy over time

• Neglecting Stop Losses: Always use stop losses to limit losses on unsuccessful trades. Resist the temptation to move stops in the hope of a market turnaround

• Overtrading After Hitting Targets: Once you reach your daily pip target, refrain from overtrading. Greed can lead to unnecessary risks and potential losses

• Trading Fatigue and Emotions: Avoid trading when tired or emotional. Focus is essential for making sound decisions; fatigue or emotions can impair judgment

• Neglecting Trading Statistics: Analyze your trading performance regularly. Identify mistakes and successful strategies to improve continually

• Lack of Proper Risk Management: Implement proper risk management practices. Without a well-defined plan, significant losses may occur

Note:

Remember, achieving daily pip goals requires discipline, patience, and aligning your trading style with your personality.