Realistic Expectation?

Hey Guys,

hope all is well. k i have been testing various strategies for the last month with mixed results, ofc few work better than the others.

My question is this, with a $2500 initial capital, 4:1 leverage and 1% risk per trade is it realistic to hope for 15-20 pips per day on a regular basis?

also when evaluating a strategy and for it to be valid how often does it need to present a trading opportunity (not a positive result but a trading opportunity).

anyone here uses fibonacci retracements as a strategy, if yes how often does it work and what other indicators can be used with it as additional confirmation?

thanks as always

Hi Grozny,

I should apologise in advance for the fact that you’re not going to like my answers to your questions, here. I’ve decided to offer them anyway, in case they turn out - [I]in the long run[/I] - to be of any assistance. :8:

The number of pips per day at which one’s results can average out, on a steady-ish basis, are not directly related to how much trading capital you have, the leverage you use or your risk per trade.

(Also, if you want to look at it in terms of average numbers of pips’ profit - though I would advise against it, myself - a monthly average allowing for about 20-22 trading days per month is probably, for most people’s purposes, a more meaningful and helpful way to try to do so.)

[B]301 Moved Permanently

http://forums.babypips.com/introduce-yourself/83554-how-make-1000-pips-per-month.html#post794798[/B]

That depends on one’s trading style, win-rate, profit factor and overall objectives.

The small group of “profitable traders” includes some people taking as few trades, on average, as one or two per month, and others taking dozens per day.

For myself, as an intraday trader with an average trade duration of around 10-15 minutes, I take about 7 trades per day, on average, and wouldn’t mind taking a few more. My underlying philosophy is basically that I have my edge and I try to apply it to the markets as often as I safely and reasonably can (volumes permitting).

Yes; some members use it routinely (I’ve seen some of their posts).

It’s not at all easy to answer without a clear definition of what you mean by “work”, but my own (increasingly firmly held) belief is that it “works” no more or less often than randomly drawn lines would “work”, and I’ve read some independent, objective, academic papers justifying this perspective. Just as is true of Elliott waves, homeopathy and astrology, I’ve never seen anything other than anecdotal, subjective, cherry-picked evidence that Fibonacci levels “work” at all, and can envisage no logical reason why they would. (There are, of course, large numbers of people who strongly disagree about all four.)

[B]Redirect to Lockhaven.edu

Almost any that you like … but that doesn’t necessarily make it an intrinsically valid, sensible or wise approach. Indeed, the whole concept of trying to improve an indicator’s performance as a trade-entry guide by “confirming its signals” with other indicators is a complicated and endlessly debatable one.

There are circumstances under which it can be beneficial (especially if using indicators with very different settings in an attempt to duplicate an element of “multiple time-frame trading” on a single chart - and I have a professional, ex-institutional, now-independent trader friend who does exactly this and successfully) but it also increases the degrees of freedom of the system and thereby actually reduces, overall, its successfully predictive chances.

[B]https://www.amazon.co.uk/Beyond-Technical-Analysis-Develop-Implement-ebook/dp/0471161888[/B]

It’s a hugely complicated subject which is really difficult to explain in simple terms. (I can probably try to, if you want me to?).

Hey Lexys,

as always i very much appreciate you taking the time to help us newbies out.

Also your reply was very helpful, i am too new in this world to have any preconceived/set in stone ideas, be as brutal as you have to be, i am here to learn :smiley:

and please do elaborate more, i wanna learn as much as i possibly can :slight_smile:

EDIT!!

one more thing, i read through the thread you attached regarding the pip count, makes total sense. but still same question, if not the pip count, what is a “realistic” and objective goal to set for day/week/month?

15-20 pips per trade or daily result? And what is the lot size are you going to use?
Regarding Fibonacci I guess its not a solid technical stuff, rather to focus on order flow to define S/R levels and play on them. But for this you’ll need additional software called Ninja Trader, which allows to track order flow on the exchange

Thanks for not reacting adversely to my post above …

The main point, I think, is that that when you add other indicators to try to “confirm the signals” of some indicator(s) you’re already using, you’re doing two main things: first, you’re reducing the number of trading opportunities that the system produces even if you’re also increasing their win-rate; secondly, you’re increasing the degree of backfitting (to whatever sample you’ve tested on to achieve validity/profitability from the increased-indicator combination), which tends overall to reduce prediction-value of the system, moving forwards.

It doesn’t follow that the highest win-rate systems are the best (in fact that’s understating it: the highest win-rate systems are usually [U]not[/U] the best). It’s better to make an average of 8 pips profit, an average of 6 times per day, than it is to make an average of 30 pips profit, an average of once per day. (That’s just an example plucked out of the air to illustrate the point: you can, of course, change all the numbers in it to make it more appropriate to your own style of trading and parameters). Not only better for the bottom line, but also often better for the smoothness of the equity-curve - a very commonly overlooked parameter.

When you backtest, to determine which indicator-combination “works best” for the sample data on which you’re testing, the greater the number of indicators you’ve used, the higher is the chance that your findings will be curve-fitted to that specific sample and therefore the lower is the chance that it will continue to be profitable.

Possibly a horse-racing analogy will clarify this last point (which is probably my main point, anyway). Imagine that you’re selecting the horses to bet on at the race-meetings at Ascot. You start by noticing that horses who won their last race tend to do very well, so you use that as an indicator.

It produces some winners and not terribly many losers, but unfortunately they mostly pay bad odds, so the system isn’t quite profitable.

You decide to add another indicator, and looking through the previous year’s Ascot racing results you discover that the horses who won their previous race [I]and are running again within a week[/I] of that previous win contain an even higher proportion of winners. So you add this indicator as well, reducing the number of horses you can back, and find that it’s nearly profitable that way.

Wanting to improve it further, you also notice that the group of “horses fitting the above categories whose names also start with the letter K and whose brothers have recently won a race at Epsom specifically on a Wednesday before 4.00 in the afternoon” contain absolutely no losers at all and that all those horses won their races at odds of 3/1 or better.

Now perhaps you have the “perfect system”, because you’ve confirmed the signals of your first indicator or two by applying another indicator or two, and historically there are no losing trades and a good R:R as well?

The reality, of course, is that you’ve done no such thing. All you’ve done is “backfitted” a system to the sample data from which you started.

Horses having won their last race is a reasonable criterion (because they’re probably in good form against their peers). Horses having run within a week is a reasonable criterion (because they’re probably race-fit). Horses whose names start with a K and whose brothers won at Epsom early on a Wednesday afternoon is nonsense - it has nothing to do with their [B]future[/B] winning chances at all, although it [I]apparently[/I] (key word) had everything to do with their [B]previous[/B] winning chances.

Causation and correlation are two different things.

As you see, I’ve chosen an [U]obviously[/U] stupid example, to help to make the point clearly.

In trading, many people do this with indicators [I][U]without[/U] knowing which ones are stupid[/I]. Because, in trading, knowing which indicators are silly takes loads of experience, judgment, understanding, and all the things that so very few aspiring traders really have. And there’s an enormous amount of “information” out there, especially online, written by people who also don’t know, so it’s [B]terribly[/B] easy to misjudge.

My point is that adding indicators can reduce the chances of dealing with causation rather than correlation.

All that said, it remains true that there can be and are, also, valid examples of doing this and making better systems out of it. As a counterpoint to the warnings above, I’ll mention a friend of mine (very successful trader) who trades a system in which the entries are suggested by a “short, fast Ichimoku” indicator. She has successfully “confirmed” its signals by adding a “long, slow MACD” as a directional bias. She takes the long Ichimoku signals as entries only when the MACD line is above both its signal-line and its midline (and [I]vice versa[/I] for short trades). It worked. It improved her method and her income without unduly reducing her trading opportunities. The reality is that by adding a very slow indicator to a very fast one, what she was [B][U]really[/U][/B] doing (and of course she’s the first to acknowledge this) was effectively adding an additional [U]time-frame[/U]. What the indicator happened to be wasn’t very important at all ([U]within reason[/U], provided it’s not a completely stupid one - and neither Ichimoku nor MACD is inherently stupid). But this takes some experience to appreciate - and, unfortunately, the places one looks (especially online!) to try to harvest the fruits of some of this experience are also full of nonsense about homeopathy and astrology … oops, sorry, I mean Elliott and Fibonacci, and the neophyte has [B]no practicable way of distinguishing[/B] between that and “the real thing”, because nobody was born knowing how to do this stuff.

So what I’m really saying (with absolutely [B][U]NO[/U][/B] disrespect or condescension implied at all, I hasten to add, because we have [I]all[/I] “been there; done that”!!) is that (a) it’s actually a pretty dodgy principle to start with, and (b) you’re probably not at this stage going to know how to do it productively anyway.

Just my perspective. :8:

Edited to mention …

There [B]isn’t[/B] an “exchange” for spot forex. Nor is NinjaTrader necessarily needed for that anyway. You’re posting total nonsense again, Mr. “Verified Analyst”. Still, it may help Grozny to appreciate how much misinformation there is, around, from apparently “good sources”, which is actually part of what I was explaining above - so maybe I should thank you for adducing some evidence for my point. :rolleyes:

What the heck is a “Verified Analyst”?

I was a professional analyst for years and never had that tag here. Maybe “FX-Men Honorary Member” trumps?

Hope so. And if it doesn’t trump, maybe it clintons, anyway?

I was laughing at that when I saw it - what’s next? ‘[I]Verified Verifier[/I]’

Unrealistic trading target is always costly! But its true, maximum new Forex traders start their live trading with a huge monthly target event though their trading performance wasn’t good in demo! But the reality is, traders face emotion based problems in their first live trading a lot! This is way, a number of Forex trader lose their money in live account although, they were profitable in their demo!

I agree with you but many who aim a high return won’t have a good winning streak or a good green pips track record. Getting some big odd wins and then losing most of the time is not how professional traders trade.

Might these is greedy if want to making high return on single trades, although possible to getting big profit if in lucky, but overall trading if always want to making huge profit with high risk taker I think on certain circumstances will facing failure and it will influence in emotion

Some odd trades or we can say them stunt trades may produce some good profit by taking high risk but we should not attempt such trades on our primary trading account. A separate trading account with a little capital is enough to do such trades.

Profound, doubtless …


It may sound easy and make just 10-20 pips a day but that is not how real trading works. There are losing days, weeks even months. It can take years to consistent enough to make 20 pips a day

Making 10-20 pip a day sounded appealing to me in the beginning but was disappointed only to find out it is theoretical and not practical. This unrealistic strategy of trading can be dangerous for newbies especially.

Forex is beneficial for those who expect only profit which they deserve never expect beyond your limits and we should make the decision of profit in the light of our investment, our planning and strategy in order to get the fruitful results.

With Forex you can make some good money. So expectations could be anything. But the problem is that the chances of you losing money are very high. You need to learn as much as you can before you start trading with real money

Better to focus on protecting what you have and taking advantage of the opportunities that come.
Limit downside and expand the upside.