Does this make any sense?

I copied this from a website explaining which time frame to use.

Profit goals
The smaller the time frame the smaller the profit goals set by traders for each trade. E.g. while on 5 minute charts Forex traders would see reasonable targets at the next support/resistance level 15-30 pips away from the entry point, on the daily time frame profit goals will be extended several days into the future with expectations of banking 200-400 or more pips in one trade.
A trader can make same 200-400 pips trading 5 min time frame, but it would require a lot of trades to be taken, hours of price monitoring, which is not an easy task.

[I]What he’s saying is the amount of Pips taken is what matter… Well isn’t this total BS? 30 pips can bring the same profits as 400 pips depending on what lot size you take. And if risking only say 3% on “any” trade, pips mean nothing.[/I]

Hourly charts have wider price ranges and therefore require wider stops to be placed, and in case of being wrong on a trade, larger losses to be taken.

[I]Again… A wider SL means nothing if risking the same %. Am i missing something?[/I]

If to speak about daily charts, losses there if occur are even larger as the market requires wider space to swing the price.

[I]Again…[/I]

So here you have: smaller profit targets and smaller losses or larger profit targets and larger risks.

[I]his summary[/I]

Now please tell me if I hae this all wrong.

Example senario
I choose to trade on the daily. I find an entry

Account size = £2000
Risk 3% = £60
Required SL = 100
Risk Reward = 4:1
PIP value = £1.60

Succeed with this trade.

[U]Profit = £240[/U]

I then choose to trade on the 5min

Account size = £2000
Risk 3% = £60
Required SL = 10
Risk Reward = 4:1
PIP Value = £6

Succeed with this trade

[U]Profit = £240[/U]

So I dont understand what this guy was saying at all.

But the reason im even bothered if because I wanted to trade on the daily. But while backtesting I did a trade, the swing up too 3 months and I had a SL of 200 and made 4:1. My profit was £240 over 3 months !!! This can be done sooooo much quicker by trading smaller time frames…

What should I do… I have a full time job.

Note - I do understand that profits on higher TF’s will be more if you can keep the SL minimal. But surely this is not wise. I have learnt to first look at what SL is needed then go from there. If a 100 pip SL is needed then thats what you should put. As far as I can see, the ONLY way to increase profits to make up for the long waits on higher Time frames is to reduce the SL. I don’t no what to do about it. Maybe I should trade the 4 hr instead of daily. Should be manageable witha full time job still.

thanks

Asked him did he ever pass basic math?

For scenario 1 If your risking only 60 bucks your pip value should be .60 not 1.67 he’s asking you to risk 167 dollars at that point. in other words a whoopin 8%.

Btw he probably did it like this 100/60 not 60/100 <== is the proper way to calculate it.

Its also what your comfortable with. I used to want to scalp heavy then I got tired of all the work I had to do where as a swing trader can set up an order and say ok if this hits great and if it wins great, if not oh well next trade. Where as when I was scalping its more like c’mon hurry the F*#%$ up I wanna get out and into the next and I had certain times of the day and only certain days where it’d be good

hmmm… pick a pair. what is the current price right now on a daily chart? What is the current price right now on a 5 minute chart?

If price moved 400 pips over a couple of days on a daily chart, what did it do on the 5 minute chart during those two days?

My back yard is about a quarter of an acre. When I mow the grass I walk 3 miles.

It’s the weekend… I’m being slightly cryptic.

“My back yard is about a quarter of an acre. When I mow the grass I walk 3 miles”

Brilliant encapsulation of the basic idea :slight_smile:

640 acres is 1 square mile.

There are more moves to capture in the lower timeframe waves making up the bigger wave on higher timeframes.

If you’re trading off the daily and you’re finding the need to put a 100 pip stop then you’ve maybe already missed your entry in my opinion. Also, trading off the daily does not automatically mean you’re looking to capture 300-400 pip moves. You could look to be capturing chunks of the daily range of a pair. Seeing as pairs like E/U move over 100 pips per day on average there’s good profit %s to be made in capturing those sort of trades.

Yes you possibly could bump up your profits by jumping onto all the intra-day moves on a 5m chart but if you’re risking 3% with a 10 pip SL on a 5m you better be prepared to take your share of 3% losses as price can move 10 pips in the blink of an eye. If you’re looking for something that will work for you with a full time job then the higher timeframes are most likely what you’ll have to consider working with. You can pick your entry zones on the daily / 4H and try to capture a decent portion of the daily range. If you can translate around 80 pips into 2% profit you can increase your account very nicely with just a couple of good trades per week. You don’t need to be aiming for 4:1 R/R if you’re picking good entries.

Actually, that’s not as good a metaphor as it sounds at first blush - unless your backyard is only 1 mower width wide that is. :slight_smile: