How many pips profit do you look for in a trade?

[tommog]

Hi,

As experienced traders know forex trading lends itself more to longer term trading than a price making environment such as futures, forex offers some excellent trends and typically moves at least 60 pips in a day so i find targeting around 20-40 points profit from a trade with about a 15-20 pip stop loss works well. I usually take only a couple of trades a day and am usually out of my positions by 5:30pm London time.
This is just what suits me and is the way i discovered/taught the most effective approach to forex.
I am interested to know what sort of targets and risk:reward management other traders employ?

Thanks

Tom

 

[JonnyT]

Currently 1 would be nice

 

[tommog]

bit of a rough patch eh jonny?

 

[trendie]

tommog,

what I have found is I carry out analysis according to TA and define entry and exit criteria, and thus a target.

however, the market is fluid, and the problem is that I fail to re-evaluate targets in light of changing conditions.
and I fail to take a smaller profit because I fixate on the initial target.
( thats if and when I pick the right direction )

 

[TheMoneyMachine]

Hello Tommog,

I predominately use a similar risk/reward ratio but as i am sure you are aware 40 pip runs can (and do quite often) materialise into much more lucrative opportunity's, therefore for the majority of my positions that trade at my initial target i either liquidate a fraction of my position or maintain my original position size depending on the market conditions and adjust my stop accordingly. I seldom liquidate my entire position at my initial target level and prefer to be stopped out of a position.

Regards

TMM

 

[badtrader]

I made 38 pips on 3 trades from 10,30am to 12.15am trading EUR/USD Futures

 

[TheMoneyMachine]

I made 38 pips on 3 trades from 10,30am to 12.15am trading EUR/USD Futures

12.6 pips per trade , now i understand why you call yourself Badtrader!!!

Regards

TMM

 

[FOREXHUSKY]

Trends???Lol there is one huge mess in market.

Some pple take 10pips some 30pips some long terms like me for 100-400pips,all depends from system,skills,money.managm.

I dont see nothing wrong in taking 10pips trades i ratio o winners is 7 rom 10 or better.
But then we talk about master skills..and so..so..

best regards

And i wish you all TRENDY markets.

ForexHusky

 

[badtrader]

12.6 pips per trade , now i understand why you call yourself Badtrader!!!

Regards

TMM

It's not about how many pips you make,it's about trading SIZE. That's what makes you money.

 

[counter_violent]

It's not about how many pips you make,it's about trading SIZE. That's what makes you money.

This is so On The Money , far easier to take 10 pips @ £10.00 than 100 pips @ £1.00

C V

 

[hopefull]

Interesting thread..

Very similar to you tommog...

I trade cable primarily as the intraday vehicle and typical trades are targeting 25-30 pips to first target with a sub 12 pip stop loss.

I tend to cover the position at first base (if reached) then simply trail the move or bust the trade if the reverse signal is given ..often simply the 'que' to SAR if RR to first target in opposite direction warrants the venture.

Alongside this I trade a swing strat on Sterling,Cad and Jap that triggers in off the 60 min TF's using the faster timeframes for 'risk control' .These trades are usually gunning for 80 pips + min to first target point...Same process applies from there.

Interestingly enough some of the best 'swingers' trigger in the evening

There are many different views on trading fast (sub 60 min) as opposed to longer term timeframes..My own (fwiw) is that the only thing that matters is consistency. Whether a trader is a fast timeframe sniper or longerterm swinger success is judged from the bottom line of the PnL...Then its just a case of letting then compounding factor run its course.

 

[tommog]

"This is so On The Money , far easier to take 10 pips @ £10.00 than 100 pips @ £1.00

C V"

Is it though? I agree in the short term you could have a run of winning 10 pip trades with a winning percentage rate of probably well over 60-70%, however is it easier to sustain profit going for 100 pips over the long term?

Say you are going for 10 points profit, on the pair with the lowest spread eurodollar, interbank you get 1 pip spread, retailers get 3pip spread so take an average of 2 pip. So in order to get 100% of your profit target it requires a 120% move and so as your profit target increases the less of a factor spread becomes. So your trading costs go down the bigger your target both in terms of percentage of your position and also frequency of trades (going on the basis longer term traders trade less)

More importantly, I believe in forex you need a stop of at least 10 pips (12 including spread) to withstand market, so by aiming for 10 you are working at a risk reward of (at best) 1:1 which puts pressure on entry system to be more accurate.

Going on the assumption the tighter your stop loss the more chance it will be hit, by going for a bigger profit target you can afford to increase your stop loss whilst still keeping your position the same size i.e Buy 10 lots of Euro/dollar stop -10 target +10 is the same as Buy 5 lots of Euro/dollar stop -20 target +20, both yield the same profit/loss, but I would argue you could call the market correctly and still be stopped out in the first example, where as in the second example your posiiton has the breathing space it needs to prove profitable.

I could trade without a stop loss and a profit target of +2 for ages and make 99% winning trades, but that 1% will eventually catch up with me and blow my account, I think finding the ideal risk:reward ratio is far more important than entries.

Just a few thoughts,

Tom

 

[Akuma99]

My targets are determined by two things, what time of day is it, and what type of trade am I executing. By this I mean, I trade macro patterns ranges and breakouts, if I am making a range trade then my target will be smaller than a breakout trade.

It also depends on the time of day, if I am trading mid Asia, then the most i am looking for is 10-20 pips (I trade of 1H and 4H charts), if I am mid EUR or US session then my targets are somewhat larger, I try to avoid the opening of markets, but if the signal is given I look for somewhere in the middle of the two to catch some pips before the often seen whipsaw.

 

[westernforce]

It very much depends on what time frame a person is trading off of.
Someone using the 5 minute charts to trade off, (not just pin pointing entry) should not be looking to book too many pips, while someone using the 4 hr and daily as their trend should not be taking too few pips, else the RR is blown away again.

So as already said, it boils down to the old pearl of wisdom of looking at risk / reward ratio.

 

[oriana]

I am in my 5th week of trading forex, and am very pleased with my results so far. Total pips over the 5 weeks have been 83, 99, 100, 151, and 165 this week. I have executed about 30 trades and have only had 1 losing trade so far. However, I am in no way complacent about it, and will not be surprised if soon I see a lot of this profit go in one bad trade. Nevertheless, so far I've done a lot better than ever I expected. At first I aimed for 20 pips a day, but now I hold trades longer and have managed 3 trades with 75 pips or more.

 

[tommog]

well done oriana with the success, its good you are realistic to realise you will have bad days as well as good, but if you lose a lot of that in one bad trade things are VERY wrong, say for example you are averaging 30-40 pips profit a trade there is no way you should tolerate a loss greater than 30 pips

Tom

 

[Sambar]

Which brokers would you recommend for trading forex

 

[tommog]

If you cant afford to trade via currenex (think the minimum is about £20,000) I think the best bet by far is oanda, tightest spreads available and ive never had any problem with the service, not much more you could want really.

Tom

 

[Sambar]

Thanks tommog for your reply Are your funds held in a segregated account

 

[tommog]

no probs, yeah they are held in a segregated accounts, all their security info is on their site

Tom