How many pips to double account?

[Maira]

Hi,
I have a little question that how many pips I need to double my account if:
1. I open $1000 account
2. Risk 2% per trade
3. Keep 2:1 reward:risk ratio
4. I have a 60% winning rate or 6:4 win to loss ratio
5. Do not use any leverage at all

Please explain with calculation

Thanks in advance

[bmcl2343]

That isn't enough information to perform the calculations that you're asking for. You would need to know how many pips you were risking on average per trade.

Even then you couldn't really calculate it. In what order do your results come?

Beyond this, don't be scared of leverage. If you understand it and respect it you'll be fine. I don't know if zero leverage is even available in FX!?

The system you've described would in practice double your account comfortably. Again and again in fact.

[SoundOfLight]

this can't be THIS simple, can it?

double your account = 100% gain
no leverage means 1% gain in currency pair = 1% gain in your account
1 pip = 0.01% (since 'pip' stands for 'percentage in point' or 'percent of percent')

so, 100% (gain target) = 10,000 pips NET gain needed to double your account

at this hour, i don't feel like doing the rest of the math for the risk:reward and win:loss but i'm sure you can figure it out.

[ClarkFX]

this can't be THIS simple, can it?

double your account = 100% gain
no leverage means 1% gain in currency pair = 1% gain in your account
1 pip = 0.01% (since 'pip' stands for 'percentage in point' or 'percent of percent')

so, 100% (gain target) = 10,000 pips NET gain needed to double your account

at this hour, i don't feel like doing the rest of the math for the risk:reward and win:loss but i'm sure you can figure it out.

Uh... What are you talking about?

The OP didn't give enough information to get an actual answer.

OP, you need to know your average stop loss in pips as well to calculate what you are asking.

[Maira]

I am sorry. I am a complete beginner. Here I make a sample calculation. Please tell me that is it correct?

1. I open $1000 account
2. Risk 2% per trade
3. Keep 2:1 reward:risk ratio
4. I have a 60% winning rate or 6:4 win to loss ratio
5. Stop loss at 30 pips and take profit at 70 pips

Per pip value:

$ 1000 x 2% = $ 20
$ 20 /30 (stop loss) = $ 0.6666 per pip

Profit and loss calculation
Number of trades = 50

Winning trades = 30 (60% winning rate) x $ 0.66666 (per pip value) x 70 (take profit) = $ 1400

Losing trades = 20 (40% losing rate) x $ o.55555 (per pip value) x 30 (stop loss) = $ 400

Net profit = 1400 - 400 = $ 1000

Thus, the account is doubled. Am I correct seniors?

If it is incorrect what is wrong with this calculation?

[purplepatchforex]

If it is incorrect what is wrong with this calculation?

It may or may not be wrong, I'm sorry I can't be bothered working it out, but the thing is, you've not accounted for MM or compounding, so the calculation isn't really much use.

[Maira]

Please ignore the compounding. And I dont know what is MM

[OOPs]

3200 pips should do it

[Clint]

1. I open $1000 account
2. Risk 2% per trade
3. Keep 2:1 reward:risk ratio
4. I have a 60% winning rate or 6:4 win to loss ratio

So far, so good.

5. Stop loss at 30 pips and take profit at 70 pips

Per pip value:

$ 1000 x 2% = $ 20
$ 20 /30 (stop loss) = $ 0.6666 per pip

Here's where you start to get into trouble.

First of all, a 30-pip SL and a 2:1 reward/risk ratio yields a TP of 60 pips, not 70 pips.

But, the bigger problem is this. In order to make a 30-pip loss equal to a 2% dollar loss, your position size must be $6,667, which does not comply with your "no leverage" requirement. Specifically, you would have to use leverage of 6.67:1 in order to make each pip (of gain or loss) equal to $0.6666.


Let's assume that you abandon the "no leverage" stipulation, and choose instead to trade a position size of $6,667. Let's see what 50 trades would produce, using the corrected numbers, and 6.67:1 leverage.

50 trades (on average) will yield 30 winners with 60 pips of profit per trade, and 20 losers with 30 pips of loss per trade.

Overall, on average, those 50 trades will yield a net gain of 1,200 pips.

1,200 pips x $0.6667 per pip = $800 net profit.

Obviously, you will have to increase the number of trades made (by 25%) to 62.5 trades, thereby increasing your pip total to 1,500 pips gained, in order to increase your net profit (also by 25%) to $1,000 --- which is your goal.

I'll leave it to you to check the math.

________________________________________

Returning to your original post, and your original stipulation that you would use no leverage, let's crunch the numbers. We're about to demonstrate that Sound of Light is correct: Without leverage, you need to earn 10,000 pips of net gain in order to double your account balance. So, here goes ---

1. "No leverage used" means that your position size cannot be larger than your account balance.

Let's say that your position size = your initial account balance = $1,000. And let's say that you do not increase your position size as your account balance grows --- that is, you do not use compounding.

Let's say that you are trading EUR/USD, or some other pair of the form XXX/USD. This means that one pip is worth $0.10 per pip for a $1,000 position.

2. If you want to use the entire 2% risk ($20 risk per trade) stated in your question, then your stop-loss must be 200 pips. If your stop-loss is 200 pips and your R:R is 2:1, then your take-profit (TP) must be 400 pips.

In other words, to comply with the conditions laid out in your original post, you must trade rather large price moves --- what we call Long-Term-Swing trades. Let's assume that you are capable of doing that.

3. On average, out of every 10 trades, you will have 6 winners, with a profit of 400 pips each; and you will have 4 losers, with a loss of 200 pips each.

6 winners x 400 pips - 4 losers x 200 pips = 1,600 pips net gain per 10 trades, on average

= 160 pips net gain per trade = $16 net profit per trade.

4. In order to earn $1,000 net profit, you would need to place 1,000 ÷ 16 = 62.5 trades.

There's that number again --- 62.5 trades. It's like the Twilight Zone, eh?

62.5 trades (on average) would yield 62.5 x 160 = 10,000 pips net gain = $1,000 net profit.

5. If you were to use a 30-pip stop-loss, and a 60-pip take-profit, and no leverage, then you would be taking way less than 2% risk per trade. In this case, doubling your account balance would require many more trades (than the 62.5 trades calculated above), but you would still have to earn 10,000 pips in net gain in order to double your account.

[InnerCircleTrader]

Hey Maira!


I get this question in many forms or another... please allow me to offer just one example of how this could answer your inquiry.

Assuming you trade with the parameters listed below... leverage as long as you are actually going to limit your risk to 2% per trade... consider this.

Trading 2% risk per trade on $1000 and assuming a meager 1:1 reward ratio you only need to profit approximately 25 pips per week... net. Yes that's correct... 25 pips per WEEK. If you manage to do this four weeks a month you would stand to earn 6% compounded interest. This over the course of a calendar year equates to more than doubling your account and it never requires more than a total of 100 pips per month!

The magic is in the compounding of your profits. It regulates the fear and greed associated with trading as the targets are so realistic it's not a stretch for Newbies to believe in the goals... the problem is they grow greedy and seek more... and a faster pace to doubling their money.

For more consider these:

What Every New & Or Aspiring Forex Trader... Still Wants To Know - YouTube

Forex Risk Management - YouTube

Handling Losses and Inevitable Drawdowns - YouTube


Hope this helps!

Hi,
I have a little question that how many pips I need to double my account if:
1. I open $1000 account
2. Risk 2% per trade
3. Keep 2:1 reward:risk ratio
4. I have a 60% winning rate or 6:4 win to loss ratio
5. Do not use any leverage at all

Please explain with calculation

Thanks in advance