The idea of making 20 pips per day in forex is one of the most common goals among retail traders. It sounds modest, achievable, and sustainable. But is it really that simple? This guide explains what 20 pips a day means in practice, how you can approach it, the key terms you need to understand, the strategies that traders use, and — most importantly — the real risks that often get overlooked.
A pip (percentage in point) is the smallest standard unit of price movement in forex. For most major currency pairs, one pip equals 0.0001 of the quoted price. For example, if EUR/USD moves from 1.0910 to 1.0911, that is a 1-pip movement. The goal of making "20 pips a day" means capturing 20 pips of price movement — in your favour — per trading day.
On the surface, 20 pips does not sound like much. In a typical trading session, EUR/USD can move 50–100 pips or more. So why is 20 pips such a popular target? The appeal lies in consistency and risk management. The idea is that by aiming for a small, achievable daily profit, you can compound your gains over time without taking excessive risk. A 20-pip gain on a standard lot (100,000 units) is worth approximately $200 (depending on the pair and account denomination). On a mini lot (10,000 units), it is $20.
According to the Bank for International Settlements (BIS), the forex market sees average daily movements that can easily accommodate a 20-pip target. The challenge is not the availability of movement, but the consistency with which you can capture it without being stopped out by adverse price action.
To consistently capture 20 pips per day, you need a systematic approach. Here is a breakdown of how the target typically works in a trader’s daily routine.
The first step is to determine your position size. If you risk 1% of your account per trade and your stop-loss is 10 pips, then a 20-pip profit gives you a 2:1 risk-reward ratio. For a $10,000 account, risking 1% means you risk $100 per trade. If your stop-loss is 10 pips, each pip is worth $10, which corresponds to a mini lot (10,000 units). A 20-pip profit would yield $200, or 2% of your account.
Many traders use a combination of technical indicators (e.g., moving averages, RSI, support/resistance) to identify entry points. They then set a take-profit order at 20 pips above their entry (for a long trade) and a stop-loss at a level that limits their risk to a pre-determined amount. The goal is to let the trade reach the take-profit without being prematurely stopped out.
The 20-pip target is often pursued during the London or New York sessions, when liquidity is highest and price movements are more predictable. Many traders focus on the first few hours of a session, capturing their 20 pips and then stepping away from the screen for the rest of the day.
The Commodity Futures Trading Commission (CFTC) and National Futures Association (NFA) both emphasise that while small daily targets can seem attractive, they require discipline and a solid understanding of risk management. The CFTC has noted that many retail forex traders approach the market with unrealistic expectations, and even a 20-pip target can be challenging to sustain over time.
Before diving into strategies, it is essential to understand the terminology that underpins the 20-pips-a-day approach.
The smallest price move in forex. For most pairs, 1 pip = 0.0001. For JPY pairs, 1 pip = 0.01.
A fractional pip, equal to 1/10 of a pip. Some brokers quote prices to 5 decimal places (e.g., 1.09105), with the 5th digit being a pipette.
The difference between the bid (sell) and ask (buy) price. This is the cost of entering a trade and must be overcome to reach your 20-pip target.
Borrowed capital that amplifies both profits and losses. With 1:100 leverage, a 1% move can result in a 100% gain or loss on your margin.
An order to close a trade at a specified price to limit losses. Essential for protecting your account when a trade moves against you.
An order to close a trade when it reaches a specified profit level. For the 20-pip target, this is set 20 pips above your entry (long) or below (short).
The ratio of potential loss to potential gain. For a 20-pip target with a 10-pip stop-loss, the risk-reward ratio is 1:2.
The difference between the expected price of a trade and the actual price at execution. Slippage can reduce your 20-pip gain or increase your loss.
Several strategies can be used to target 20 pips per day. Below are four popular approaches, each with its own strengths and weaknesses.
Identify key support and resistance levels. Enter a trade when price breaks above resistance (long) or below support (short) with momentum. Set take-profit at 20 pips and stop-loss at a level that invalidates the breakout.
In a trending market, wait for price to pull back to a moving average or a Fibonacci retracement level. Enter in the direction of the trend and aim for 20 pips as price resumes its move.
In a sideways market, buy at support and sell at resistance. Target 20 pips within the range, with a stop-loss placed just beyond the range boundary.
Trade the immediate volatility following high-impact economic data releases. Enter quickly on the initial spike and aim to capture 20 pips before the market settles. This is high-risk and requires fast execution.
The Financial Industry Regulatory Authority (FINRA) warns that while these strategies can be effective, they require practice and adaptation to current market conditions. No single strategy works all the time, and traders should be prepared to adjust their approach.
The table below compares the four strategies based on key criteria, helping you decide which approach might suit your trading style and risk tolerance.
| Strategy | Best Market Condition | Average Win Rate | Risk Level | Time Commitment | Key Requirement |
|---|---|---|---|---|---|
| Breakout | Trending or range-bound with clear levels | Moderate (40–60%) | Medium | Moderate (monitor levels) | Accurate support/resistance identification |
| Pullback | Strong trending market | Moderate–High (50–70%) | Low–Medium | Moderate | Trend identification and patience |
| Range Trading | Sideways, choppy market | High (60–80%) | Low | Low–Moderate | Clear range boundaries |
| News-Driven | High-impact news events | Low (30–50%) | High | Low (fast action) | Fast execution and risk tolerance |
The Federal Reserve publishes economic calendars and data release schedules that can help news-driven traders prepare for volatility. Always verify current rules, fees, spreads, rates, broker availability, and platform terms with the relevant authority or provider.
Let’s walk through a real-world example of how a trader might approach the 20-pip target.
Setup: It is 9:00 AM ET, and the London-New York overlap is in full swing. EUR/USD has been in a clear uptrend on the 1-hour chart, with price consistently respecting the 20-period exponential moving average (EMA) as support.
Entry: Price pulls back to the 20 EMA at 1.0900. The trader enters a long position at 1.0902 (allowing for a small spread). The stop-loss is placed at 1.0892 (10 pips below entry), and the take-profit is set at 1.0922 (20 pips above entry).
Outcome: Price bounces off the EMA and rallies to 1.0925. The take-profit order is triggered at 1.0922, capturing 20 pips. The trader risks 10 pips (0.1% of a $10,000 account with a mini lot) to make 20 pips (0.2% return). The risk-reward ratio is 1:2.
Review: The trader checks the trade log and notes that the strategy worked because the trend was clear and the pullback was shallow. The same approach might fail in a choppy or ranging market, so the trader remains selective.
This example illustrates the importance of discipline and selectivity. Not every day will offer a perfect setup. Forcing trades to chase the 20-pip target often leads to losses.
Use this practical checklist before you start your trading day. It will help you stay focused and avoid common errors.
The National Futures Association (NFA) has issued investor education materials that highlight the dangers of overtrading and over-leveraging. The NFA BASIC database can help you verify the registration status of any broker you are considering.
Making 20 pips a day is not a guaranteed or risk-free endeavour. The CFTC warns that most retail forex traders lose money. Even a modest daily target can be difficult to achieve consistently due to market volatility, slippage, and psychological factors.
Past performance is not indicative of future results. A strategy that works today may fail tomorrow. Always use proper risk management, never risk more than you can afford to lose, and consider trading on a demo account until you have developed consistent profitability.
For additional guidance, consult the Federal Reserve’s exchange rate data, the BIS triennial survey for market context, and the FINRA investor education materials. Always verify current rules, fees, spreads, rates, broker availability, and platform terms with the relevant authority or provider.
This guide does not provide personalised financial, legal, or tax advice. It is for educational purposes only. Consult a qualified professional for advice tailored to your situation.