Direct answer: what “20 pips a day” means
“20 pips a day” is a goal expressed in pip units: you aim for a net change of about 20 pips in your trading performance within one day. A pip is a standard way to describe the size of a currency pair’s price movement, based on how most quotes are written. In practice, the same pip movement can produce very different gains or losses depending on position size and contract specifications.
To be clear, reaching 20 net pips consistently is not something you can assume from the idea alone. In day trading, pip totals fluctuate because market conditions change, and because transaction costs reduce what is earned after execution. The measurable parts you can define are: (1) the pip target, (2) the method used to enter trades, (3) the average result of each trade, and (4) netting after costs.
How “20 pips a day” works in day trading
A pip target works only when you can connect it to outcomes of individual trades. A simple way to think about it is:
- Your daily net pip result is roughly the sum of pips from closed trades.
- Those pips come from price movement during your trade (gross), minus execution costs (net).
Important definitions to keep distinct:
- Gross pips: pips you would count from price movement.
- Net pips: what remains after spread, commissions (if any), and slippage. Even if a move hits your level, the fill price can differ.
- Trade expectancy: the long-run average result per trade, which depends on win rate and the size of wins versus losses.
Because each day contains a limited number of opportunities, you typically need to consider at least two variables:
- How many trades you take per day (trade frequency)
- How big your average win and loss are in pip terms
If a plan takes few trades, it must achieve large wins to reach 20 net pips; if it takes many trades, it must win often or have favorable average payoff. Either way, the spread and commission effects scale with trade count: more trades generally increases total cost impact.
Independent checks: test whether 20 net pips is realistic
Since there is no single formula that works in all market conditions, you can only evaluate the idea with verification methods that don’t rely on prediction.
Here are checks that focus on what you can observe:
- Historical range check: Compare your pip target (20 net) to typical intraday price movement for the instrument you trade. If the market often doesn’t travel enough, the target becomes unlikely without using high leverage or wider holding windows.
- Cost-aware backtest: Evaluate results using realistic spreads, commissions, and slippage assumptions. The same strategy may look workable on gross pips but fail on net pips.
- Consistency check: Measure performance across multiple periods, not only a best-looking sample. Look at how often the daily net pip result actually reaches or falls short.
You can also sanity-check the “work” of the goal by using your own metrics:
- Average net pips per trade
- Average number of trades per day
- Variability (how wide results swing)
If your measured distribution shows that daily net pips fluctuate heavily, then “20 pips a day” is better treated as a sometimes-achieved outcome rather than a repeatable rule.
Limitations and risks to understand
Several limits make the question easy to misunderstand:
- Pip targets are not guarantees: Market movement and execution outcomes are uncertain, so net pips can miss the goal even when the idea seems correct.