I try to answer the question of whether 10 pips a day is a realistic target and whether it is a sufficient target.
Let’s start with a little clarification.
Such goal setting like 10 pips a day has its advantages and disadvantages.
Advantages: 10 pips is a measurable target.
This can be followed by further steps to expand the trading plan, such as adding a condition that if you manage to earn 10 pips during the day, you stop trading, thus avoiding overtrading.
Disadvantages: unrealistic expectations. The possibility of achieving such results will vary for different traders, strategies, mental toughness, risk management, etc.
In other words, it may be a realistic goal for one trader, but not for another. Imposing the expectation that it must be those 10 pips a day every day can lead to bad decisions.
After all, there are slower days when there are no significant moves and few opportunities even for simple scalps.
I could make more arguments, but I think you understand the point.
What does 10 pips a day mean?
To earn 10 pips a day means to make 10 pips of profit. For example:
- you opened 7 trades
- 3 you closed with a total profit of 16 pips
- 4 you closed with a total loss of 6 pips
- in total you earned 10 pips
I hope it is obvious at this point :).
How to earn 10 pips per day
I can recommend few strategies which can be divided into two groups.
The first group of strategies: fewer trades, your goal is to catch slightly longer moves.
In this case:
- it is important to maintain good risk to reward ratios,
- usually the stop loss will be a little further away
- the position size will be smaller
You can test strategies like:
Swing catching at supply/demand zone – you locate where the more important supply demand zones are and where larger players can take positions.
Swing catching at pivot confluence – you mark on the chart where the more important pivot points levels overlap based on different time frames. For example, there may be S2 support from 4-hour Pivot Points and S1 support from daily Pivot Points in the same place. Then it could be a good place to take a long position.
Doji/hammer hunting – you can look for them on different time frames, because the entry will still be on the lower frame after additional confirmation.
Fibonacci – from simple strategies like entry near 61.8% to complex ones like harmonic patterns.
The second group of strategies: scalping in a more classic approach where you try to catch movements of two-three pips each and open more than a dozen trades during the day.
In this case:
- the stop loss will be closer
- the position size will be larger
- risk to reward may be closer to 1:1 or 1:2 than 1:3
In my experience, strategies based heavily on price action like The Strat and strategies based on Fibonacci (harmonic trading, 61.8%) work best for that style of scalping.
Is 10 pips a day enough
Every trader has in his mind a realistic sum of daily earnings with which he will be satisfied.
You need to take this sum, juxtapose it with your profit per lot, and count on what lot you need to trade to make such a sum at 10 pips profit per day.
OK, you already have the first important piece of information – lot size.
Now you need to focus on your trading account and its size, as this is the only way you will be able to open large enough positions.
You need to take a realistic look at the size of your trading account, the leverage your broker offers and the risk you are able to accept per trade.
Usually your current account situation and your ideal daily target will be far apart.
At this point you should make a plan – determine how much you need to increase the capital in your trading account so that you can trade on your target lot.
Beware of pitfalls
In an ideal scenario, you trade with bigger lots and make quite reasonable money having 10 pips of profit.
Only for this scenario you need adequate capital.
Most traders don’t have it so they try to speed up to get to that place.
That’s when mistakes start to occur – overtrading, lack of proper risk management, blown accounts, etc.
It’s up to you to decide in which direction you will go. For example:
- you may have a small capital but trade on high leverage. You accept more risk, but are confident in your strategy and want to accelerate the results,
- you have less capital and trade on smaller leverage. The risk is smaller, you prefer a safer approach.
That’s why it’s a good idea to write everything down:
- goals
- steps
- realistic dates
so that you know what values are involved at which time.
