I got a quick question. I know a lot of people don’t like counting pips but that’s because people don’t do it consistently. If you trade .10 lots for every $1000 in account or 1.00 lot for every $10,000 in account and stick to that strategy if you catch 300 pips (total. I understand you’ll lose some trades but win more on others as well) that would be 30% a month. Compounding profits would be much more than that. Starting with $10k account 300pips first month at 1 lot according to plan^ would be $13k. Month 2 you’re trading with 1.3 lots or around $13 a pip +300 pips would be $16,900 account size. Now you’re trading 1.69 lots. ETC. what I’m getting at is 300 pips a month trading daily and 4hr charts is not that hard a lot of people do that weekly. What I’m asking is if it’s not that hard but is extremely profitable why don’t more people see this? I see a lot of people saying 20% a year gains or something is good but that just seems ridiculous in this market. You would only be risking 1-5% per trade so not gambling like some people say and still making amazing returns? You can check the math everything checks out but was just wondering if I’m missing something? Thank you.
How long have you been trading live with this system, Im guessing you must have made a ton of profit.
Compound interest is a wonderful thing. Its great fun on a wet afternoon to multiply up your principal to get your compounded total after 10 years and find you’re going to be a millionaire.
But in practice people treat profits the same way they treat earned money. They follow the advice for new traders to keep their account small so they can’t lose everything they’ve saved. But they keep on following that advice when they have doubled the small account, even though now only half of it is what they had saved and half is of profits.
To reinforce their poor judgement, by this point they have now proven they have a winning trading strategy which will continue to grow their capital, yet they do not accept they now need to adapt their trading style.
So they draw out the profits and continue to trade with the savings. This leads to one of two outcomes - with strong discipline they earn a modest income from trading. With weak discipline once - rather than strong discipline every single time - they lose half their savings and stop trading.
Whatever; it is! Making this kind of return for a long run; it’s not easy!
Mathematically, you are correct. However, at least in my experience, the problem with this attitude towards returns is that it encourages us to try and fit the market into a neat little box. And, of course, markets perform differently all the time and it is usually better to fit our trading to the current market rather than expect the market to always observe our set of profit ambitions.
For most people there are probably, on a realistic level, only about 15 days in a month for trading since the real world often intervenes with other work, holidays, kids etc, etc. So a day-trader would need to average about 20 pips net every single day. If their trading method usually generates a 50% success rate then they would need 2 winning trades of 20 pips for each losing trade of 20 pips. But when trading off a 4H or Daily chart, a 20 pip stoploss is ridiculously tight. In addition, 4H/Daily signals usually last for more than an intraday so does one let it run beyond a 40 pip profit or close it every time it gets there?
On the other hand, if one is a position trader, looking for moves lasting maybe a week or more, one cannot tell beforehand when and at what level the position will be closed (e.g. a trailing stop). So it becomes impossible to fit one’s trading into a neat 300 pip monthly box.
A more commonsense approach is to build your capital with sensible risk management and gradually increase one’s position size accordingly.
It is a very human approach to want to define profits in percentages and pips per time unit. But, unfortunately, the markets do not play ball with us in that endeavour.
If we concentrate on optimising our entries and exits, and our risk/money management instead of focusing on an arbitrary pip target, then we will gain whatever the market is willing to give up according to the strategy that we are employing.
Perhaps I can give you another scenario how the simplicity of this approach might not be so simple in practice:
I note that my chosen market trades a daily range of around 100 pips so I decide that I will trade intraday for 20 pips on 15 days each month.
The first fews days go fine…
Then comes a day when my first trade gets stopped out at 20 pips. OK no problem. I enter another trade later…and again get stopped out for 20 pips - it happens, nothing unusual here.
OK so I decide that today is not a good day to trade and call it a day.
The next day I now have to make four consecutive trades of 20 pips in order to catch up with my timetable. But this market only usually covers a 100 pip range in a day so maybe it is better to double up my position size and go for just one trade, maybe two…
The result of that? Well I leave that to your imagination! But the point is that the pressure is coming from keeping up with a self-made timetable rather than reading the market and taking what it gives.
It is not always so easy as it looks on paper…
Trading forex is not like as math science I think, maybe having target 300 pips is a reasonable target, however in trading is also about the loss in trading, but maybe also will depending with each trader skill, for me still difficult to making profit consistently, so I like to withdraw profit rather than compounding profit
Following…
well yes if you use stupid scalping methods above i can imagine how you think that.
yes this makes sense i thinka month makes it less of a box i think when people say some odd number per week that gets boxy because you have no idea what trades are lining up i am a swing trader btw. but monthly is different cause you can wait and take safe trades or just take 1! either way 2 months in and doing great so far. i think everyone should try this out its simple and easy and risk management is just as good as most.
Exactly! (This was a hypothetical example, btw! 
) but that is how many inexperienced people end up trying to achieve a target when it is measured in pips. If one sets a target of, say, 300 pips per month and trade off 4H charts, then it is inevitable that one will monitor it daily and with a strong temptation to cut profitable trades short once there is a small pip gain - and run losses to avoid realising a setback and hoping it will come right.
Personally, I think it is better to judge one’s pip potential according to the type of trading strategy one is applying rather than a fixed amount per period. Market movements vary a lot and this inevitably reflects in one’s earnings regardless of what one aims for as a target.’
But I think there is some value in your philosophy here. It is relatively easy to gain a modest number of pips per trade which can then accrue surprisingly nicely over a month and with little risk involved. But it can be painfully boring waiting for the entries and very frustrating to then often watch the market continue for a significant distance after the trade is closed!
This goes against a) the enthusiasm to be in a trade and b) the aim to gain the biggest chunk out of each move. In some cases, these are respectively termed overtrading and greed! 
But as a swing trader, I don’t really see the benefit of setting an arbitrary fixed target/limit. Surely, it is the strategy’s intrinsic performance that really counts over time?
Thanks for the advice