A practical guide to setting take profit levels in pips for forex trading — from understanding what pips are and how take profit works, to evaluating your strategy, avoiding common mistakes, and managing risk effectively.
In forex trading, a pip (percentage in point) is the smallest unit of price movement for a currency pair. For most major pairs, one pip equals 0.0001 of the quoted price (or 0.01 for pairs involving the Japanese yen). For example, if EUR/USD moves from 1.1000 to 1.1001, that is a one-pip movement.
Take profit is a pending order that automatically closes a trade when the price reaches a predefined profit level. It is one half of the standard risk-management pair, the other being stop loss. The core question every forex trader faces is: How many pips should I set for my take profit?
The answer is not a fixed number — it depends on your trading style, the currency pair, market volatility, and your risk appetite. This guide walks you through the factors that determine an optimal take profit level and provides practical frameworks to help you decide.
According to the Bank for International Settlements (BIS) 2022 Triennial Central Bank Survey, the daily global forex turnover exceeded USD 7.5 trillion. With such liquidity, price movements measured in pips occur every second, making precise take profit placement both an art and a science. Always check current market conditions and broker execution quality.
When you place a take profit order, you instruct your broker to close your position at a specific price level. Here's how it operates across different order types:
A limit take profit order is placed at a price level that is better than the current market price. For a long position (buy), the take profit is set above the entry price. For a short position (sell), it is set below. The order executes when the market reaches that price.
A trailing stop dynamically adjusts as the price moves in your favour. For example, if you set a 30-pip trailing stop on a long trade, it moves up by 30 pips each time the price rises. If the price reverses by 30 pips, the order triggers. This allows you to capture larger moves while locking in profits.
Many professional traders scale out — they close a portion of the position at a conservative take profit level and let the remainder run with a wider target or a trailing stop. This balances capturing some profit with the opportunity for extended gains.
Take profit orders are not guaranteed to execute at the exact pip level during periods of high volatility or thin liquidity. Slippage can occur, especially during major news events. Using a limit order (rather than a market order) reduces slippage but does not eliminate it entirely. Always check your broker's execution policies.
There is no universal pip count that works for all traders and all market conditions. Instead, you should base your take profit level on a combination of the following factors.
The ADR is the average number of pips a currency pair moves in a single day. Pairs with higher ADR offer more room for profit but also greater risk. For example:
Your take profit target should be a multiple of your stop loss distance. A 1:2 RRR means your take profit is twice the distance of your stop loss. For instance, if you risk 30 pips, your take profit should be at least 60 pips. This ensures that even with a 50% win rate, you remain profitable over time.
Your trading time frame directly influences your pip target:
Place your take profit just before key support/resistance levels or Fibonacci extension levels. This increases the probability of the trade reaching your target without being reversed by market structure.
| Trading Style | Time Frame | Typical Pip Target | Risk-Reward Ratio | Best Suited For |
|---|---|---|---|---|
| Scalping | 1–15 min | 5–25 pips | 1:1 to 1:1.5 | High liquidity, low spread pairs |
| Day Trading | 15 min–1H | 20–60 pips | 1:1.5 to 1:2 | Major pairs with moderate volatility |
| Swing Trading | 4H–Daily | 50–150 pips | 1:2 to 1:3 | Trending markets, all major pairs |
| Position Trading | Weekly+ | 150–500+ pips | 1:3 to 1:5 | Long-term macro trends |
Market volatility changes with economic news, geopolitical events, and central bank announcements. Always adjust your take profit levels based on current volatility (measured by ATR) rather than relying on static pip counts from past trades.
Here are four common forex trading scenarios and how to approach setting take profit targets in each.
You are scalping EUR/USD on a 5-minute chart during the London session. The spread is 0.6 pips and volatility is moderate. You enter a long trade at 1.1050, place a stop loss at 1.1030 (20 pips), and set a take profit at 1.1070 (20 pips) — a 1:1 RRR. The trade hits your target within 12 minutes.
You are day trading GBP/USD on a 1-hour chart. The pair has an ADR of 140 pips. You enter at 1.2600, set a 40-pip stop loss, and a take profit at 1.2680 (80 pips) for a 1:2 RRR. The price reaches 1.2680 during the US session, and you close the trade with an 80-pip profit.
You are swing trading AUD/USD on a daily chart. You enter at 0.6700, place a 60-pip stop loss, and set a take profit at 0.6880 (180 pips) — a 1:3 RRR. The trade trends for five days and hits your target, capturing a significant daily move.
You enter a long position on USD/JPY at 148.00 with a 40-pip stop loss and no fixed take profit. Instead, you use a 30-pip trailing stop. The price rises to 149.00 (100 pips) before a 30-pip retracement triggers your trailing stop, locking in 70 pips of profit.
Trader Maria checks the ADR for EUR/USD — 110 pips. She decides to set her take profit at 55 pips (half the ADR) and her stop loss at 25 pips, achieving a 1:2.2 RRR. She enters a trade at 1.0950, sets TP at 1.1005, and SL at 1.0925. The trade reaches her TP within 4 hours, yielding a solid profit while staying well within the daily range.
Choosing the right take profit level depends on your personal trading profile. Use the following criteria to evaluate which approach suits you best.
If you have a low tolerance for drawdown, opt for tighter take profits (e.g., 20–40 pips) with a 1:1 or 1:1.5 RRR. If you can withstand larger swings, aim for higher targets with a 1:2 or 1:3 RRR.
Frequent traders (scalpers and day traders) typically set smaller targets to capture multiple small gains throughout the day. Less frequent traders (swing and position traders) aim for larger targets per trade.
In trending markets, use wider take profit levels or trailing stops to capture the trend. In range-bound markets, use tighter targets and take profits at range boundaries.
Consider your broker's execution speed and slippage. If you experience frequent slippage, set your target a few pips above/below the expected level to account for execution latency.
The U.S. Commodity Futures Trading Commission (CFTC) advises retail forex traders to use stop-loss and take-profit orders as part of a disciplined risk management plan. The CFTC notes that traders should not rely solely on take profit orders but should also monitor their positions actively, especially during volatile market periods. Source: CFTC Forex Fraud and Retail Trading Advisories.
Reality: A fixed 100-pip target may be unrealistic for many pairs and time frames. The optimal target depends on ADR, volatility, and your risk-reward ratio. For major pairs with an ADR of 80–120 pips, a 100-pip target is possible only in strong trending conditions.
Reality: Take profit orders are subject to slippage, especially during news events or thin liquidity. The execution price may differ from your target by a few pips. Using limit orders can help, but they are not immune to gaps.
Reality: A larger target reduces the probability of the trade being filled. If your take profit is set too far, the price may reverse before reaching it, resulting in a missed opportunity or a loss. Balance target size with hit rate.
Reality: Trailing stops are excellent in trending markets but can be detrimental in range-bound or choppy conditions, where they may get whipsawed out early. Fixed take profits work better in sideways markets.
Setting take profit levels is not without risk. Here are the key risks and how to control them.
Setting a take profit too tight may cause you to exit a trade just before a strong trend continuation. This leads to missed profit potential and can be psychologically frustrating.
Control: Use a trailing stop or scale out — take partial profits at a conservative level and let the remainder run with a wider target.
When you set very small take profit levels (e.g., 5–10 pips), the spread and commission can consume a significant portion of your profit, requiring a high win rate just to break even.
Control: Ensure your target is at least 3–5 times the spread to maintain a positive expected value. Use a minimum of 15–20 pips for most major pairs.
During high-impact news events or overnight gaps, your take profit may be filled at a less favourable price than your target, reducing your net profit or even turning a winner into a loser.
Control: Avoid placing trades just before major economic announcements. Use limit orders rather than market orders for take profit, and consider wider targets when volatility is high.
Some traders hold on to losing trades because they are "waiting for the target" or move their take profit further away in a desperate attempt to break even. This often leads to larger losses.
Control: Set your take profit and stop loss before entering the trade, and do not adjust them unless market conditions change fundamentally. Stick to your trading plan.
The National Futures Association (NFA) emphasises that forex traders should use "stop-loss and take-profit orders to manage risk" but cautions that these orders are not guaranteed in fast-moving markets. The NFA recommends traders understand the risks of slippage and gaps, and to verify their broker's order execution policies. Source: NFA Investor Education — Forex Trading.
Disclaimer: This article is for educational purposes only and does not constitute financial, legal, or tax advice. Trading forex carries a high level of risk and may not be suitable for all investors. Always verify current rules, fees, spreads, rates, broker availability, and platform terms with the relevant authority or provider.