this is a major dilenma for me as i can’t determine just how much is enough to close a trade. see what i mean; i get conflicted as when to close a trade when it has moved in my direction and counted a good number of pips before it starts moving against me. i have lost good trades to this indecisive posture and i wish to know by general consensus what should be my pip target on my trade. it can vary too based on the kind of trader one is, but i consider myself a day trader since i come in and out of trades and move by the tide as it comes. when my trade has moved up 25 pips to 30 pips, many times it reverses and goes and hits my stop losses set previously. it is frustrating when it happens and makes me question my discretion and strategies. so back to the question; what is the best number of pips a trade should move before you can close it if you are a day trader?
It’s up to you to decide TP and SL in your trading. It depends on the number of entries you make in a day, size of the equity, amount of risk you’re ready to take. A point to take off may be the risk amount per trade, for example 2% from equity is the max drawdown you’re ready resist. Installed special indicator from FF to my Hotforex MT4 which automatically calculates the number of pips corresponding to 2% from current equity. To make profit/risk ratio positive you may set TP at 3% (or more) from equity then you can easily calculate the number of pips you should make everyday.
Cheers
Hi Maxi,
There are a lot of traders (even scalpers) that take off 50% of their position size when the trade hits the 1:1 mark and move the stop loss to breakeven. This basically allows you to still get some profits even if the trade reverses.
On average, how many pips do you allow for your stop loss?
i had a $1,000 opening account and was doing well initially making modest profits and setting reasonable stop losses till i tried trading the news where i exponentially increased my lot sizes and blew up all my profits till my account hit $200, then i stopped. now i trade on 0.02 lot and set profits at 30 pips and loss at 20. please do tell me if that is too tight or not compard to what is general knowledge of risk management and capital protection. i’ve had my share of losses and i want to build back my capital from $200 back up, but i don’t know if my stops are reasonable or too conservative. please need your advice
I believe those parameters are too tight when trading the news.
Heavy news releases can make the prices swing in larger amounts, sometimes hundreds of pips in a short amount of time. Plus you have to consider slippage and the spread widening. If you’re trading with a broker where the spread widens during new releases, the bid or the ask price will trigger stop losses/take profits and not the actual price.
Just be careful about that one.
Are you still planning on trading the news?
I believe those parameters are too tight when trading the news.
Heavy news releases can make the prices swing in larger amounts, sometimes hundreds of pips in a short amount of time. Plus you have to consider slippage and the spread widening. If you’re trading with a broker where the spread widens during new releases, the bid or the ask price will trigger stop losses/take profits and not the actual price.
Just be careful about that one.
no way am i trading the news again. i’ve been beat too much by the extreme volatility when news is released. i will just be trading normally from now. i want you to tell me how to set stop losses and take profits when trading the 1hr charts. and what should be by target on a daily basis, thank you
My estimation is that those stops are waaaayyyyy tooo tight. They are simply within the purely random daily changes in price. Because of that, your system, no matter what it is, is a break even system less costs. When it showed a profit you were simply in a period wherein it outperformed itself and then the losses came during a period wherein it underperformed itself. The sum of the two periods and all of the remaining time wherein you trade this system will bring the net performance to breakeven less costs (commissions, spread, rollover, etc.) Thus, because of costs, it will lose money in the long run.
To illustrate that, consider a coin toss: heads you win a dollar, tales you lose a dollar. You may have a string of flips that looks like you are winning: 20 flips, 17 of which are heads and 3 of which are tales would have you up $14. We would say that string of flips was a period of outperformance. Later, another string of 20 flips lands tales 17 times and heads 3 times. With that string you would be down $14. We would say that string of flips was a period of underperformance. But the more we flipped, the closer we would come to a total breakeven, a ZERO result, a result wherein the total number of heads and the total number of tails were equal the the net winnings were $0. The expectancy of this system is zero and any period better than that is one of outperformance and any period worse than that is one of underperformance.
Suppose we charged you 10 cents for every flip as a fee. After 1000 flips you would expect to have won a net sum of $0. You may have some slight difference because that 1000 flips may have slightly outperformed or underperformed the breakeven expectancy, but it would likely be close. But you would have lost 1000 times 10 cents which is $100. So your net performance would be breakeven ($0) less costs ($100) which is a $100 loss.
To disprove my assessment, try trading the exact opposite system (go short instead of long and long instead of short). You will find that doing so will result in the exact same performance. If you truly have a winning system, then the opposite system is truly a losing system… …and vice versa.
Trading with stops and take profits of equal distance from the entry within the daily randomness will bring you toward a 50/50 win/loss ratio (you are just as likely to see a 20 pip move against you as you are to see a 20 pip move for you). Traders try to skew such systems away from breakeven by putting stops closer to the entry than the take profit. But that simply makes the system take losses more often enough to keep it a breakeven system. If there were no fees or spread or costs of any kind, you would have a system that would approach a performance of ZERO (no loss, no win).
It is only once you allow profits to run that you can get outsized profits that will skew the performance toward the positive. And it is much easier to execute such trading as you go longer term. As you go longer term (trading much longer than a few minutes or hours but over days, weeks, months, even years) you not only get much more opportunity to get outsized profits, but costs as a percentage of income go down and thus magnify the profitability gain achieved by going longer term.
Also, the social biases that move prices toward outsized profits are not detectable in intraday price movements. They are only detectable over the course of many days, weeks, or months. I wrote up an explanation of this phenomenon here.
My suggestion is longer term systematic diversified trend following.
-Adrian
The pips you are going for depends on the type of trading that you are doing. If you are scalping, 20 pips per trade is more than excellent. Most scalpers go for 10 or less pips. If you are day trading, then maybe 20 to 80 pips is fare, without counting news spikes. Swing traders may go for more than 100 pips to maybe 300 or 500 pips. and so on… So it all depends.
the way i see it yeah it will depend on your trading style and the strategy your are using, and i do agree with jeklo, by moving the sl to a point of break even is good, the only thing that remains are two options its either you break even or take profit and thats way way better than losing 
best of luck.
Got to agree with A on A. Intraday trading is really all about adjusting risk and weighing probabilities.
I have been programming auto trading system with a programmer, it is truly fascinating because by focusing on money management almost 90% so many factors came into play. It is unlikely that we will sell this to small retail traders (so don’t ask :)) but after coding money management rules, trading range, etc over 2 years, trading a 1h chart the system delivered 3-40% return no more than 12% drawdown. Then we decided to create some tolerances for minors as the performance accross pairs varied. We are still making adjustments.
To answer the question, the intraday is so noisy that it is simply about reducing average loss and understanding that positions need to be rolled over for gains as the trading range is narrowing due to algos in the market. So targets can be based on the trading range and other tools like fibs or even support and resistance as long as you know that the 5m chart of say cable can move easily 10-15 pips so imo sl has to be at least 20 to avoid hunts meaning target must be at least 40 pips roughly 25% of the average trading range. Anything less will ensure you system will lose overall.
In fact we to specify this we tested our program in reverse put in a very wide stop outside of the trading range and targets inside the trading range. Well over 1 year on H1 test the program delivered 80% return (There is a flip side, it could go wrong and drawdown is heavy). So again intraday is all about that.
Just deciding on average loss against range and it is the same principle for profit. Of course you can use 1.618 fib targets but long-term trends are the way forward.
I remember a good advice from an experienced trader: “big profit, small loss” ,but it still depends on the movement of the trends, if you’re kind of trader make decision based on pips number, I think you should learn more about support and resistance levels.
I’m in a similar situation right now. Used tight SLs, and lost most of my account in trading the news (or at least trying to), my account is at 22% atm.
I’ve noticed that it’s more important to place the SL at a certain spot around the price and the 2nd priority being a certain number of pips that you can afford to lose, there are spikes in the price on a lot of the charts and you can’t guess where the price will sling back before going in your direction.
yeah you’re right about that… still learning the ropes and i actually feel i’m better at it now. i’ve been making regular profits trading my strategy and not being too emotional. more careful with news events and stuff like that. have a healthy stop loss and an achievable take profit. persistence pays
Lots of good posts already… I would just add that a daily ATR is a useful guide to setting targets…
to he honest me personally I try to stay away from the news…
when I do my analysis and check what opportunity in the charts can be traded I alway check for any major news on the economical calendar…if there’s something that can cause huge swings I rather to don’t trade that pair…
plus I try to get from 40 to 60pips per trade…with a stop loss of 20 to 30 pips…I’m always going for a safe 2:1.
I don’t have much time to trade so I prefer to stay safe and don’t keep the trades too long max 3 trades a day win or lose doesn’t matter…and I have to say that despite the simplicity of this strategy it’s quite safe and profitable
hope it will help you!..
good luck with your trades; -)
yes sergio, it’s really helpful the advice you’ve given. believe me when i say this… it’s just what you opined that i have been doing and it was working just fine till i began playing with news releases and not knowing how it works, i have been beaten quite badly. but i think i have come to see that based on the kind of trader one is, you can have a target number of pips for every trade. some say as little as 10 if you’re scalping, or as you say 40 to 60 pips with a 2:1 win lose ratio. i will still try to determine what number of pips i’m comfortable with in closing out a position, since it’s all relative as everyone reads the markets differently.
thank you so much…I’m happythat my advice it’s been useful for you…
yeah…it’s true…major news can cause big swings. …and kill your orders (but you can be lucky and push your pair towards your TP!).
at the end of the day you will determine which TP will be comfortable for you…just remember trade at least on 2:1 ratio…and don’t chase the losses…otherwise when you will win you will have 3 or 4 trades…and when you will loose you might end up with 8 or more trades…you know what I mean…
I’m have a quite conservative strategy…open 3 trades…win or loose doesn’t matter…maybe I can open an extra one if I can spot some chance to reduce or save the day…but that’s it…the aim is to play with odds on your favour in long term…when you win you have to win a lot …and when you loose you lose small! 
again…I hope my advices will help you
A similar situation is happening with me as well. I’m mostly a swing trader, trades on daily time frame and usually set my TP a lot bigger. Many times the price had reached my TP but me being out of trading after some pips. Its a very problematic situation that I need to sort out quickly.
I’m kind of shocked that no one has brought this up in detail yet, but “moreoption” did mention it. Support and Resistance levels are key in determining when and where to enter a trade, how much stop you need and how much profit you should be attempting. The first thing I would always do is to mark solid S/R levels, then if I want to take a trade, I would consider how much room it has to [I]run.[/I] In other words, how far is it from the next S/R level? I determine how large my stop should be not based on pips but on a logical point where if it were to move against me “this far” then I would consider my trade invalidated. However much I want to risk in dollars, I would calculate exactly to that stop loss size…and then I shoot for three times my risk in return. I will try to find an example to illustrate with a chart…
I trade price action mainly on the daily, but this classic “signal, stoploss, entry, and take profit placement” can be applied to lower time frames as well (with less success as you continue down the line, just keep that in mind). I had a hard time finding a good example chart, hopefully this one will work:
So in the second circled area, we have two pin bars or rejection candles followed by a large indecision candle at this strong 1.3000 S/R level. Ideally, we would have taken the signal of the second rejection candle and placed our stop just above it (say around 1.3005). We would have been shooting for a 50% retracement entry on the next candle (which turned out to be a large indecision candle, which did reach a 50% retracement point). Our short trade exit should be at least two or three times the risk of our stop loss, so I would have attempted to exit around 1.2955. If you had taken the first signal and placed your stop loss just above it, you might have been stopped out, but many traders would have put it a little beyond the S/R level…so maybe not. Hopefully some of this makes sense and is helpful, even if you’re trading a different system, S/R should always be considered…and your stop loss size can be any size if you properly calculate your lot to the $ amount that you want to spend, not based on a certain number of pips. Then make your reward at least twice your risk (but I usually do three times risk unless I am approaching another S/R level).