Let's get real...

[rhodytrader]

Originally Posted by andyfx

I know people say that Pips mean nothing. Well i disagree totally. Weather i had a 1$ lot size or a 100$ it means that you are in profit, no matter what size. And this is a very hard place to be consistantly as i understand.

Being profitable isn't the point. It's about providing something that people can actually use as a basis of comparisson.

If I told you I made 10 points trading stocks today you might think that sounds great. But what if it was 1 point each on 10 different stocks I was holding at once? That doesn't sound quiet so great anymore, does it? That's the equivalent of pip counts I've seen where someone adds up the pips from all simultaneously open positions (or multi-counting pips on multiple lot size trades).

If I told you I made $10,000 trading today I'm sure that would sound amazing to many traders. But if I'm running a $10 mln portfolio it suddenly doesn't sound so impressive.

Further, what if I'd had to risk 10 times what I made to secure those profits? Again, definitely not very appealing.

All this is why we have performance statistics like win %, win/loss ratio, % return, max % drawdown, and R - so people can compare apples to apples.

[dannybly]

What a refreshing thread: honest, courteous and keeping it real

But what I don't see is anyone saying what kind of risks are being taken to achieve that?

To me this is really the most important point. You've got to consider the risk taken to achieve those huge returns.

I think this is one of the central points in Nasim Taleb's Fooled by Randomness - well worth a read IMO...

[andyfx]

Well if you read aswell as you advised then you would be able to see that i use a very strict MM technique. No more than 3% exposed. I totally disagree about the fact that is not weather i am in profit or not because after reding many posts not everyone manages to see profit at all.

So to new traders, if you dedicate your life and every hour you can to Forex and use very strict rules along with a decent system, then you CAN make many many pips. To reconfirm my 1200 pips made in 24hrs was achieved with
3% MM.

Sorry to dissapoint.

[dpaterso]

Hello,

Fun reading!!!

My 'trillion dollars worth':

I personally think what happens with these HUGE claims to profits is this:

A new trader will 'battle along' for a while and then all of a sudden they 'hit a big one' and not two minutes later they're posting that they've found it!!! 'The Holy Grail' of systems!!! How do I know this and why do I say this??? Because this is EXACTLY what I did last year!!! Eighteen months or so later I look at my first post on that thread and feel totally idiotic!!! (OK in fairness to ME of course I made 'no bones' about posting my subsequent losses as well which is something else that I notice does not get posted too often i.e. the threads are REAL busy when the money is 'flowing in' but the moment 'the wheels fall off' they tend to go REAL quiet).

Don't get me wrong here either i.e. I'm not saying that you CANNOT make thousands of pips on a trade BUT what's important is making those same thousands of pips on EVERY trade MOST of the time and, as others have correctly stated, it does not really matter if you're making thousands of pips per trade if each pip is only worth a fraction of a dollar in my opinion. If that's the case then this can only ever be a 'hobby' or something to 'pass the time' or something to 'master' 'for the hell of it' i.e. if it's your main or sole source of income then it's the amount of $$$ you make that counts.

Also: 'not all pips are created equal' e.g. a ten pip movement (profit) on GBP/ZAR is not going to nett you anywhere NEAR what a ten pip movement on GBP/JPY is going to nett given the same lot size and / or money management rules (as a matter of fact you'd not even have covered the spread on GBP/ZAR with a ten pip movement) so be careful when using the 'number of pips gained' when 'judging' the success of a system.

Me: I work only on the percentage gained on my capital on a monthy basis. If I've reached my goal then I don't really care whether it was reached because I made a two pip profit or a twenty thousand pip profit!!! What's more I (try to anyway) ONLY check my percentage gain at month end i.e. I try to concentrate on TRADING as opposed to concentrating on whether or not I'm going to reach my monthly goal or not.

To 'jsese' (the thread starter):

No offense is meant by this comment BUT with all the experience and opportunities that have been affored you by virtue of the fact that you have worked at some 'primo' trading firms you should really be making a WHOLE LOT more than 5% or 6% per month. Hell: I've only been at this for two years or so and even I'm doing way better than that 'NOW' and I stress the word 'NOW' i.e. for the past four months or so. Whether or not consistent gains over a period of four months can indeed be deemed 'consistent' I don't know (and I suppose if not then only time will tell). With the amount of money ($50 000) that you're trading with you should have NO problem. If you're interested then take a look at my 'not so' NEW thread (and no I'm not 'peddling'): Trading Systems in 'New Concepts In Technical Trading Systems' by J. Welles Wilder. If you've been in 'the game' as long as I'm presuming you have based on your post then I'm sure that I don't have to tell you who J. Welles Wilder Jnr. is of course. As a matter of fact I'd like your 'take' on it the reason being that it concerns me deeply that (not only because of your post but since things have 'turned' for me) I find myself CONSISTENTLY worrying that the gains that I am indeed making are 'too good to be true' and it's almost as if I'm just waiting for the 'bubble to burst' and even MORE of a concern to me is the fact that this type of attitude could very well become a 'self fulfilling prophecy' as it were (those 'old hands' on the forum know full well the extent of the losses that I incurred last year and the pain that it's caused me so of course I'm concerned especially since we're talking sort of 'night and day here' i.e. HUGE CONSISTENT losses and margin calls and wipeouts to HUGE CONSISTENT % gains i.e. no 'in between')!!!

One last thing: this 1% / 2% / 3% 'rule' concerns me deeply i.e. the 'rule' where you NEVER risk LOSING more than 1% / 2% / 3% of your capital. It seems to me that MANY people don't understand the implications of this 'rule' as it pertains to leverage (and I know that it took me an AGE to make the 'connection' between the two and John 'rhodytrader' has gone to GREAT lengths to explain this 'connection' but still I don't think it 'sinks in' with most people. Not at first anyway). The reason I mention this is because with the exception of only one of Wilder's systems (funny enough it's the WORST performing system of the lot) none of the systems use stop losses 'as such'. I'm just mentioning this because maybe THAT is a possible reason why your gains are in the 5% to 6% region??? All I'm saying is that sometimes even although we're doing everything 'by the book' it does not necessarily mean the 'the book' is always right. (Now I'll 'duck' to avoid all the arrows coming my way)!!!

Edit:

Uh. One question: do you think that if I could CONSISTENLY make 50% - 280% gain on capital per month then the likes of Morgan Stanley would offer me a job??? Man I'd love that!!! It'd be a 'classic' 'rags to riches' story!!!

[Andrewunknown]

Hey Andy,
It's regrettable that this is continuing to play out. No one's raking you over the coals and you're taking the all the questions - some antagonistic, some not - with a good spirit.

How about this? A few questions about the method you used/are using as reflected on the screenshot; but nothing to do with indicators, etc.: pure money management questions only. If you can lay out a responsible strategy there, I think that'll add a lot to the credibility of whatever method you're using.

So, 3% max. on the table in aggregate?

I see 16 positions on your screenshot. 14 positions are covered by stops, 2 are not. On the 14, in total you were capable of a maximum loss of 785 pips. E/J and G/U had no stops in place, which could've counted against you pretty significantly on a different day. A lot of your stops are 70-80 pips out from your entry, but some not, and there is no pattern based on position sizing. The question then is: how do you determine your stops? And to go along with that, how did you determine your TPs?

Your net on the screenshot was 1092 pips (unless I left a couple pairs out) - an awesome take for a single day, but by no means out of the question. But, how did you determine your position sizing? In some cases you have .01 lots, .1 lots, and .5 lots - were these arbitrarily chosen, or is there some characteristic of the method governing this?

You began the day with 4789. or so in account equity, using over $2500 in available margin - whatever the numbers were (don't have the screenshot up), it accounted for a bit over 54%, or half of your equity. Does that seem a bit steep, or no?

With all of that on the table, can you explain how your exposure was limited to 3%, which comes to approx. $143.67? That's far less than the 785 pips (plus potentially hundreds more on your 2 naked trades) exposes you to.... Any idea of the dollar value that corresponds to those 785 pips, after accounting for the different position sizes? Are you suggesting that was per trade? If so, there must be some overarching calculation that pulls all 16 of your positions together neatly, because with different pip values, disparate position sizes and no real pattern for setting stops on over a dozen pairs, that's a substantial amount of work; and when one of the money stop or limit orders that are set fires off, that would require a rework of the entire thing. So, if you would, please explain the 3% further.

Please don't think I'm grilling you: just trying to ask some direct, non- proprietary (i.e. don't want details about the system) questions so that everyone can benefit from your answers.

Originally Posted by andyfx

Well if you read aswell as you advised then you would be able to see that i use a very strict MM technique. No more than 3% exposed. I totally disagree about the fact that is not weather i am in profit or not because after reding many posts not everyone manages to see profit at all.

So to new traders, if you dedicate your life and every hour you can to Forex and use very strict rules along with a decent system, then you CAN make many many pips. To reconfirm my 1200 pips made in 24hrs was achieved with
3% MM.

Sorry to dissapoint.

[andyfx]

Originally Posted by Andrewunknown

Hey Andy,
It's regrettable that this is continuing to play out. No one's raking you over the coals and you're taking the all the questions - some antagonistic, some not - with a good spirit.

How about this? A few questions about the method you used/are using as reflected on the screenshot; but nothing to do with indicators, etc.: pure money management questions only. If you can lay out a responsible strategy there, I think that'll add a lot to the credibility of whatever method you're using.

So, 3% max. on the table in aggregate?

I see 16 positions on your screenshot. 14 positions are covered by stops, 2 are not. On the 14, in total you were capable of a maximum loss of 785 pips. E/J and G/U had no stops in place, which could've counted against you pretty significantly on a different day. A lot of your stops are 70-80 pips out from your entry, but some not, and there is no pattern based on position sizing. The question then is: how do you determine your stops? And to go along with that, how did you determine your TPs?

Ok Trades on the Demo that you see are only to replicate my live account, so please ignore lot size. The way i figure out my lot size works on a Price channel. If any candle happens to break the wrong way out of the price channel then i will be stopped out. If for any reason i do not have a s/l on the demo it is because i have taken a 'Looser signal'.

This does not mean i dont use stopps on EVERY live trade. But as a matter of interest i wanted to see if the the trades were going to go against me, 1) how far. And 2) Would they come back my way. (They both went my way)

Your net on the screenshot was 1092 pips (unless I left a couple pairs out) - an awesome take for a single day, but by no means out of the question. But, how did you determine your position sizing? In some cases you have .01 lots, .1 lots, and .5 lots - were these arbitrarily chosen, or is there some characteristic of the method governing this?

You began the day with 4789. or so in account equity, using over $2500 in available margin - whatever the numbers were (don't have the screenshot up), it accounted for a bit over 54%, or half of your equity. Does that seem a bit steep, or no?

With all of that on the table, can you explain how your exposure was limited to 3%, which comes to approx. $143.67? That's far less than the 785 pips (plus potentially hundreds more on your 2 naked trades) exposes you to.... Any idea of the dollar value that corresponds to those 785 pips, after accounting for the different position sizes? Are you suggesting that was per trade? If so, there must be some overarching calculation that pulls all 16 of your positions together neatly, because with different pip values, disparate position sizes and no real pattern for setting stops on over a dozen pairs, that's a substantial amount of work; and when one of the money stop or limit orders that are set fires off, that would require a rework of the entire thing. So, if you would, please explain the 3% further.

Please don't think I'm grilling you: just trying to ask some direct, non- proprietary (i.e. don't want details about the system) questions so that everyone can benefit from your answers.

I am fully aware of the purpose of any questions, and i am sorry if i miss any out. But the numbers are not actually a fair representation of my live trading. I mess with the lotsizes depending on strenght of signal. Something i never do live. As soon as i hit 50pips profit i move s/l to b/e. And then it moves up in accordance with the price channel i use. However i do adjust for the ATR.
The GJ is moving nearly 300 pips i think.

Hope i got it all. Will have a look and re-post.

[jsese]

Originally Posted by dpaterso

Hello,


To 'jsese' (the thread starter):

No offense is meant by this comment BUT with all the experience and opportunities that have been affored you by virtue of the fact that you have worked at some 'primo' trading firms you should really be making a WHOLE LOT more than 5% or 6% per month. Hell: I've only been at this for two years or so and even I'm doing way better than that 'NOW' and I stress the word 'NOW' i.e. for the past four months or so. Whether or not consistent gains over a period of four months can indeed





Uh. One question: do you think that if I could CONSISTENLY make 50% - 280% gain on capital per month then the likes of Morgan Stanley would offer me a job??? Man I'd love that!!! It'd be a 'classic' 'rags to riches' story!!!

Hey dpaterso..I take no offense whatsoever. I am glad you do better than that. The truth is I could probably risk some more and make more...but I guess I am more of a Warren buffet type than anynthing else. I like slow, consistent, stress-free growth. When it comes to forex, like is said, I am a newbie, and alot of what I did in stocks doesn't really work as well. It translates but really needs to be tweaked out. I use other people inputs in forex and try them, adjust them and either keep em or discard them all together. I'll let you know how it goes.




My friend, if you are making consistently 50% to 280% a month..WHY would you possibly want to work for MSDW or SSB or anyone for that matter. If you are making that kind of return (assuming 50% monthly), and start with 10 grand you would compound to about $775 K in 12 months. No need for any firm. No need for suits, and ties, and competition..just you, your return and the rewards of not answering to anyone. 50% return a month IS a rags to riches story.

Take care and good luck.

[Andrewunknown]

Originally Posted by andyfx

I am fully aware of the purpose of any questions, and i am sorry if i miss any out. But the numbers are not actually a fair representation of my live trading. I mess with the lotsizes depending on strenght of signal. Something i never do live. As soon as i hit 50pips profit i move s/l to b/e. And then it moves up in accordance with the price channel i use. However i do adjust for the ATR.
The GJ is moving nearly 300 pips i think.

Hope i got it all. Will have a look and re-post.

Hey Andy,
Thanks for the reply, and again I appreciate your good spirit. I think we can leave it at that; 1200 pips net, or 1092 pips, or whatever, is an excellent day and I'm sure we all agree that a) those kinds of days are possible, b) they're fairly rare, even for someone willing to take trades that become apparent on 12+ pairs. I watch 18 pairs and have had a number of occasions where I've been managing open trades on half of those. If you catch a breakout on the Guppy or GBP/CHF or another pair apt to relatively high volatility, a few hundred pips or more in 24 hours isn't out of the question.

The sticking point, as always, is that even if the market makes that many pips available and you are vigilant enough and astute enough to pick up most of them, not every day is or can be like that; on days when most pairs are range-bound the system that performed so well while the market was trending whipsaws you to death. If you have sense enough to stay out of the market on a day like that, you won't pick up any pips. Or you may transition to another method where you can pick off the tops and bottoms of channels, but that isn't going to be a 1k pip day - it may not be a 10 pip day. Just so long as it isn't a -1k pip day. So the old caveats for the benefit of the beginner are very important: have realistic expectations (though there's nothing wrong with a little optimism based off what is possible), align your daily/weekly/monthly goals with them, and learn about, adopt and apply proper money management parameters on every trade.

If you can, consider starting a journal over the Forextown area of the forum to document your progress - I'm sure you'd have plenty who're interested to follow along!

[andyfx]

Originally Posted by Andrewunknown

Hey Andy,
Thanks for the reply, and again I appreciate your good spirit. I think we can leave it at that; 1200 pips net, or 1092 pips, or whatever, is an excellent day and I'm sure we all agree that a) those kinds of days are possible, b) they're fairly rare, even for someone willing to take trades that become apparent on 12+ pairs. I watch 18 pairs and have had a number of occasions where I've been managing open trades on half of those. If you catch a breakout on the Guppy or GBP/CHF or another pair apt to relatively high volatility, a few hundred pips or more in 24 hours isn't out of the question.

The sticking point, as always, is that even if the market makes that many pips available and you are vigilant enough and astute enough to pick up most of them, not every day is or can be like that; on days when most pairs are range-bound the system that performed so well while the market was trending whipsaws you to death. If you have sense enough to stay out of the market on a day like that, you won't pick up any pips. Or you may transition to another method where you can pick off the tops and bottoms of channels, but that isn't going to be a 1k pip day - it may not be a 10 pip day. Just so long as it isn't a -1k pip day. So the old caveats for the benefit of the beginner are very important: have realistic expectations (though there's nothing wrong with a little optimism based off what is possible), align your daily/weekly/monthly goals with them, and learn about, adopt and apply proper money management parameters on every trade.

If you can, consider starting a journal over the Forextown area of the forum to document your progress - I'm sure you'd have plenty who're interested to follow along!

Excelent, thankyou i will do exactly that. It is purely due to very clever MM that i am able to control that many pairs and make that many pips.

[dpaterso]

Good morning!!!

To 'jsese':

Thank you so much for responding to my post.

I beg of you though: PLEASE do not 'dissapear' from here i.e. someone with your background and experience by virtue of the fact that you've actually WORKED at some of these firms could offer some invaluable insight into what it's REALLY like to be 'in the big league'!!!

As far as risk goes: I'm following my own 'watered down' version of Wilder's money management rules and I can tell you that I believe I've found 'the sweet spot'. What I'm saying is that I am definitely not (or rather don't believe) that I am taking unacceptable risks with my or my clients money (anymore that is). That's why it'd be real nice if you took a look at the thread and maybe passed a comment or two even if you're not interested in 'joining the club' as it were.

Why would I want to work for one of those firms??? 'Feather in my cap' I suppose i.e. 'status elevation'. I mean: what's the chances of someone like me who lost THOUSANDS AND THOUSANDS of USD within the space of a year then 'turning things around' the next year to the point where you'd even be CONSIDERED for a job as a hedge fund manager or trader at one of those prestigious firms!!! See why???

Put it another way:

Here is a link that gives pretty much every details of my 'trading life' last year: Parabolic SAR - that's all!. Compare THAT to where I'm 'at' now and you'll see what I'm getting at!!! (Of course: only do this is you have LOADS of 'useless' time on your hands i.e. that thread is well over 200 pages long)!!!