I’ve been trading (on and off, full time and part time) for the past 8 years or so. I’ve not made a profession out of it, although I have made money from it.
I took a look through some of the babypips threads this week, I used to spend a lot more time here years back. One thing I have noticed, and it’s always been mentioned here, is that traders seem to sit on either side of the fence when it comes to measuring performance.
There are two distinct views which are very evident
The first measure their performance as a % of their account balance. This is all they are interested in, and this is also where I sit.
The second measure their performance by the number of pips made, and this is all they really care about. If you say you made X% on a trade, this group of people would answer back saying “yes, but how many pips does that represent”.
So if we are operating in many dynamic markets, where a 1 pip move represents a different % market move within different currency pairs…why does group 2 exist as it ‘appears’ to be illogical and skewed.
It doesn’t take much thought to realize that [B]the number of pips gained are [U]not[/U] correlated to profit[/B].
So what are your thoughts, i’m interested in the people who focus on the number of pips rather than the % of profit made per trade or per week.
I can’t help with that - I’ve always worked on a “monthly percentage of account” and “[I]average[/I] monthly percentage of account” basis, and I don’t really understand the value of the other, “pip-count” perspective very well.
But - like you - I’ll be interested to see the replies from those you [I]do[/I] want to hear from; and thanks for starting the thread.
i personaly dont realy care about pips …
trader 1 gains 200 pips and made 200 $ out of it…trader 2 gained 100 pips and made 400$ out of it …
so pips do not represent your gains due to different lot sizes you use…
for sure i count my pips for my own trade journal but i think more important is the RR you can archive on every particular trade as well as the % return per month or year
Agreed with all so far - I would personally put it down to the learning curve of trading. It’s very easy for new traders to get carried away focusing on pips (this is after all what the trading platform illustrates with respect to prices) - it’s then up to you to turn this into a percentage gain or loss.
However we all know that this should be done prior to even opening a trade.
Although measuring success in % return on account seems more logical. Focusing on pips gain for one single trade may also be equally important. For example,let’s say the average daily range of EURUSD is 90pip. For a trader who make 1 trade per day.Goal setting a number of pip gain per day OBJECTIVE might be useful to facilitate calling it a day after gaining 30pip or losing 60pip.
Focusing on pip gain may be equally important. But success measured in % on account should be more accurate.
That’s very true - however if this ‘person’ does call it a day after losing 60 pips does he not want to know if that represents 100% of his account? An extreme example, but also relevant.
I was liking this thread up to this point but this is a bit of a wishy washy statement. Personally been a long time since I thought of a trade in terms of a pips. Once I did target in on 10 pips each trade only to watch many trades miss their mark. Pips are but a unit of measurement. I’ll use pips to determine if a trade has potential in terms of is there past statistical evidence that this price action has achieved this movement before. After that it’s % risk for reward.
Given that I’m the average trader that has lost more than I have won, my own research strongly suggest any system that is measured in fixed pips is doomed for failure. Any business must be able to adjust quickly to current market conditions in order to survive. This is especially true in forex speculation. Failure to plan is a plan for failure. Targeting fixed pip returns is just lazy. It demonstrates an inability on the traders behalf to understand current market conditions and plan their business activities around it.
@ Jezzode, good to see an old hand back and stimulating debate again.
This statement nails my thoughts exactly - although I couldn’t find a way to directly say it!
@ bobbillbrone, it’s surprising how many ‘old timers’ are still here from time to time. I often come back for a read and to see what’s going on (although really nothing changes )
I completely agree, and this sums it up very neatly.
It seems to me to be true on an overall/monthly level and on a daily/trade-by-trade level, too.
(Every time I see “systems” offered with some instruction along the lines of “target for EUR/USD = 15 pips” I find myself thinking much the same thing: “What? You’re going to have the same target for a trade at 9.00 in the morning as you are at 4.00 in the afternoon, when there’s a third of that volume being transacted - how’s that working out for you?”).
I never mention targeting for fixed pip returns.
What I was trying to illustrate was this
If a particular trader make only one trade daily.
If the daily average high low range is X pip amount.
Setting a 30% of this X amount as target may possibly be a sensible target.
Daily volatility is never the same.
Targeting for fixed pip return doesn’t makes sense to me as well.
Personally, i aim for a weekly target base on past week volatility.
Once I hit that target I’m more or less done for the week.
Along the way, I do add many other (quick in quick out) position to my main trade, base on trend following, counter trend, breakout, scalping and hedging strategy. I quite a chaotic trader. Usually I make an assumption base on weekly candlestick. If price close below previous weekly candlestick mean price. I assume that current weekly candlestick will close below mean as well.
At first, I was a pip counter, then I was about percentages not long ago, now, its all about alotted time you have to tend to the price action, in my instance anyway. Im more a chunk trader as you guys know.
So now, I wake up at 5am, and work the price for 4 good hours, till 9am, then, im usually done by that time.
So, it really depends on your style. Long term would be maybe pips, and percentages, but to gauge progression, Youd have to look at percentages.
The problem i ran into, was seemed that last sqeeze trade to get those remaining pips or percentages so you can , " Call it a day", always seemed to backfire.
So now, I use a block of time, rather then a typical goal for daily targets.
Some days your on your game, some days your not. If you hit your goal early in that timeframe, then call it a day. Look at it like, “clocking out early”…
G’day old mate. Maybe we both have miss-interpreted what the other is trying to say, maybe we haven’t. But I read this and think WTF. I’m sure Lexy gets sick of posting “your system either has a statistic edge or it doesn’t” and it’s so so true. Therefor what does it matter if pip movement has been “x”% of daily range. As long as your following your rules and your system has a statistic edge, you take the good with the bad.
G’day Truth, been great reading your work recently. I think however, there might be a big difference in how you trade to someone like myself and many others here. And that comes down to capital base. Everything in this game is so much easier (not that it’s an easy game, minute to learn, lifetime to master) with the correct capital base. I’ve crunched the numbers and for how I’m doing things there is no statistical advantage to letting trades run over locking in profits at 1:1. In fact, because of my low capital base, freeing up that money for the next trade is critical for growth.
Hmmm… i prefer to use the term strategy rather than system.
Well, like you said as long as you follow your system, you take the good with the bad one. Thats true.
moneynvrsleep mentioned call it a day by block of time, i have the same sentiments as well.
i tend to like gann’s rule that a trend usually last for 3 days. After which market either reverse or movesideways for some period of time.
Lastly, for a system to be effcient. Applying the right system during the most accurate block of time or most accurate market condition, can maximise the potential of a system.
For example, if a previous weekly candlestick is an inside range weekly candlestick for a particular currency pair. i would definitely not use a trend following system for the current week. either i dont trade, change system or trade other currency pair. what i am trying to say is that backtesting by crunching number for a particular system is not an accurate way to determine if a system is good or bad. Every system have their merits and pitfalls. applying an appropriate system during the right market conditions would be best. there ways to maximise the good and minimise the bad. start thinking about time base strategy.
Man that’s crazy talk. Either the system has a statistical advantage or it doesn’t. The only way to determine this is through a process of back testing, forward testing, then apply to a real account. Otherwise you are gambling. Plain and simple.
All your talk here indicates you’re a discretionary trader, and as I am myself a discretionary trader, taking one trade, one pair once a day, it is the most stupidest way to trade. So you work hard in the background running back test after back test after back test in order to to remove discretion out of your trading. Finding out how your system gets the statistical edge. And from my own work and back to the subject of the thread, pips have nothing to do with measuring success. The only thing I use pips for is determining my risk allocation.
And for you information, I work with only one filter, time. But you and that crazy MoFo Money have got it completely wrong in regards to blocks of time. You have to look at specific hours on specific days. And think not in terms of supply and demand, thing in terms of inventory management, cause at the end of the day that’s what the big boys are doing.
So if you wish to debate this some more I suggest you start another thread. Lets not hijack this one.
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