Forex Trading - How Many Pips is Enough?

This is something that may get your attention, as you may be surprised on what tiny profit is in effect required to make a success of Forex trading.

Previously I have spoken about the midpoint daily move of the major pairs like the Eur/Usd and the Gbp/Usd, which is ordinarily nearby the 80 - 120 pips mark. Remember this is not necessarily from the low to the high or vice versa, as the shop may start and quit on the same price in that period. So as you can see, there is ordinarily a fair whole of movement in the day, and therefore abundance of occasion to grab some of that action.

Forex Trading Pip

I don't know what your lifestyle is like or what you would consider to be a decent revenue from trading to claim your present lifestyle, so lets just talk in normal terms.

Forex Trading - How Many Pips is Enough?

You are an midpoint Monday to Friday worker, and maybe work the odd Saturday. That's typical here in Australia. Your wage maybe in the vicinity of Au 0 - 00 per week. So we are seeing at approximately a 40hr week plus voyage time and expenses etc.

In your spare time after work, you dabble in the world of Forex and you aren't too bad at it. You trade for a few hours on your ,000 account, retention your risk per trade at the 2% mark, keep you stops nice and tight and lock in profits quickly. After a few hours each night, you can consistently take 20 pips out of the shop and then call it quits.

Doesn't sound like much and it also doesn't like it would be too hard. Yeh right!

20 pips a day. Now on the ,000 catalogue with 2% risk and tight stops, trading one (1) approved lot would be quite possible. Remember I generally say that one (1) pip on a approved lot is equal to Us. If you were trading the Eur, Gbp, Aud or Nzd, then that would be exact.

Now 20 pips x Us = Us0. Now for us Aussies, that is about Au0. Doesn't sound that impressive yet.

Do this for 5 days, and you end up with 100 pips or Us,000 or Au,250. Already I can see a good revision on my midpoint 40hr working week here in Australia.

I don't know about you guys, but Us,000 per week is a pretty handy sum in any man's language. (or woman's). Some will be use to more and may consider Us,000 not worth getting out of bed for. If this is the case, then I'm sure you can start trading with a much larger catalogue size or I can show you a way to growth the whole without any added risk. This would be the power of compounding!

If you can make 20 pips on a daily basis, you would be crazy not to try and heighten your profit without addition your risk. How do we do this?

Using our above ,000 catalogue and trading one (1) approved lot for the week. We make the 100 pips for the week, therefore end up with a profit of ,000. Now assuming we have a normal job and we don't need the ,000 for living expenses, so we leave it in our trading account. The following week our catalogue balance is now ,000, and with the same 2% risk per trade, we can now trade 1.1 approved lots (or 11 mini lots). If we make the same 20 pips per day, we are then development 0 profit for the day, or ,100 for the week. Where the following week, our catalogue balance would stand at ,100, and our position size would be nearby 1.2 approved lots, and so on.

As you can see, our profit is 10% per week, and that is a very good return. Now some of you may think that this is pie in the sky stuff and a tiny unbelievable. This is probably understandable as that is the way we have been trained to think, where we believe anything over 20% profit for the year is a good result.

I can assure you that 10% per week is not that spectacular in the world of Forex trading. Mind you, most traders would kill for those results, but I know of one chap who is pretty well known amongst traders that targets 5% per day, and he does this all by chasing 20 - 25 pips per day on 2% risk, just trading the Eur/Usd.

The above may be possible to perform in a perfect world, but who lives in one of those? We all know that it isn't that easy as there is something about traders that seem to just stuff it all up. I think trading science of mind has a lot to do with it, and that is probably another post in itself.

Most of the above revolves nearby a day trading type method. Obviously if you were trading off the 60 min, 4hr or daily charts, you would have separate daily targets etc. But there is nothing stopping you aiming for the ,000 weekly target and adjusting your position size accordingly.

The above examples are just to give you an idea of what is possible and that you in effect only need to make a pretty small consistent profit on a quarterly basis. You don't have to go for the big kill every trade. Control the losses, hit your targets and then call it quits for the day. 20 pips profit a day will do it!

I told you Forex trading is easy!!

Forex Trading - How Many Pips is Enough?

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