I know the answer to this is heavily dependent on each individual traders strategy and risk criteria, but [B]AROUND[/B] how much pips can we reasonably expect to profit in regards to our chosen time scale of trades for the following: 1M, 5M, 15M,1Hr, 4Hr, and Daily?
Also, any ideas on determining these ranges? These numbers will probably continually adjust to [B]different market conditions[/B] and the [B]volatility[/B] so it can change over time and must be updated. Some people use ATR, I personally measure between support/resistance levels. However, some levels can be small while others very wide as it just depends on the volatility at that time. That is why I would like to know the ideal ranges, so I can improve my trade management rules and know when trades don’t favor my risk tolerance.
I tried a search, but didn’t find any good results. Any input would be much appreciated.
The market is not fixed to follow certain rules, and it certainly doesn’t have to do what the majority of the crowed are expecting. So trying to determine fixed ranges per suggested time-frame really doesn’t reason to be logical. I suppose at best you could say “the higher the TF the greater the expected range”, however I can’t see how this would be beneficial against actually being flexible and using the market levels to answer the question for you in real time?
Thanks for your reply. Your reasoning sounds logical, however I will explain where I am coming from so you can better understand why I am asking.
First of all to clarify to everyone, by ideal range of pips per time frame I meant around how much pips should I look to bank (~what size should my TP be?) per that time frame NOT a fixed range of pips price will move on that time frame.
Now, you argue on using market levels. Sure, I could use support and resistance, but these can be very subjective and some of these levels can be as small as 15 pips apart while others as large as 100 pips apart even on the 1Hr time frame. Well, I could trade that 15 pip S/R area on the 1Hr. 5 pip bounce off support, initiate long for 10 pips. 10 pip stop (5 pips below support), but now my stop is tight, risky, and a target for stop hunting whereas following a range of 25-50+ pips rule would keep me out of a risky trade like that, because I am a TRADER not a GAMBLER. On the other hand, waiting for that large 100 pip move can keep me waiting a while and there could easily be fundamental data or news that could change sentiment and stop me out. In that scenario, it would be best to bank the pips and go about my business unless I had time to babysit my position and wait for the 100 pips while keeping an eye out for any news that could change the majority of participants directional bias.
Your right, markets are dynamic not static. It doesn’t curve fit to any rules, but in my opinion we should create rules that will keep us out of reckless positions. I understand that FX markets are just a string of continuous quotes that don’t stop and time frame is irrelevant. We may see a dead market during low liquidity times such as late NY, or a massive sell-off after a strong NFP report all on one time frame. My order flow mindset makes me aware of these things. But we should still assign some basic risk management rules in regards to the time frame you decide to trade based on how long you want to hold a position, how often you want to check the market, and what mispricing you are betting on. Going from 10 to 30 to 150 to 20, etc. all on one time frame sounds very reckless to me. We should have some sort of idea or range of how many pips we want to look for to take a trade, or bank profits and be flat rather than holding much longer than we intend to. Of course, you can aim for the big moves if that’s what your analysis tells you, but it will also require different calculations and trade management criteria, maybe even a different suitable time frame. One thing that separates me from the people that want as many pips as available is that I believe pip count is irrelevant. You could be net positive hundreds of pips in a month, yet it could still be a losing month. What I care more about is how many trades won vs. loss (expectancy) and percentage gain, not pip gain.
I know this is a lot of information but it explains why I’m asking this question. To finish off, I’ll leave with an example and a chart, because who doesn’t love those?
Around 10AM EST on May 12 I took a short @1.1250 after the small business index came out positive for the U.S. My analysis led me to believe I could expect 25-30 pips (fits the ideal range on the 1Hr TF) profit on this event and I easily reached the top end goal in a matter of hours. I could have aimed for the support (market level like you mentioned) @1.1135 for 115 pips, but it was too risky, and retail sales would of stopped me out. Now trading retail sales I could of aimed for 50 pips, or just stayed in that whole bar for 100 pips if my analysis led me to believe that I could expect more pip movement. This is much more discretionary, but it doesn’t discount the fact that having some sort of ideal range of pip profit to look for is beneficial. Either way, I would have made a WINNING trade. That’s all that matters. Sorry for the ****ty pic since I edited it on mobile.
For the TLDR who want to chime in without reading, well for one maybe if you weren’t so lazy you could call yourself a winning trader. But please refrain from commenting unless you have anything of value to add to answering the original question.
+1 on the Jezzode. I keep telling trader to trade what is there in front of them and not what they want. Having a fixed/static approach in a dynamic environment makes no sense, at least not to me.
In the end all the variables you can come up with need to be reflected in your trading strategy. Test things, adjust things and fine tune the strategy. This takes plenty of time, discipline and money. You learn by losing money (or investing money as I put it; you need to pay your tuition for a degree and the same applies here).
This, and the fact is you could say, ok I am going to limit myself to 20 pips in this 15 minute chart, but what if you don’t hit your mark of 20 pips then you will have to think ow do I close or wait and by then the market has already changed, so you need to have stuff in place, but you can never be to fixed in one position as you never know what will happen. I always say the best thing in forex trading is to not make stuff so complicated, you are not building a rocket, you are determining if the market is going to go up or down and you do that from news, indicators, judgement/experience, the simple fact is, yeah you can add all this extra stuff into the pot, but at the end of the day do you mate.
So basically you guys are telling me to trade with any number of stop loss size and take profit size irregardless of time frame, whether that could be 30 pips on 4hr or 70 pips on 5M (absurd if you ask me, it will not fit my risk profile on my chosen TF and “noise” or low volatility will kill those trades). A range DOES NOT equal fixed. Let me repeat that, A RANGE DOES NOT EQUAL FIXED. Sure, you do use news and experience to judge when to close a position BUT you should also set a TP level especially if you’re not day trading and constantly watching markets. Even then, you should place a TP because in today’s HFT environment, choppy and unpredictable spikes are common. Your analysis should tell you when to get in and when to get out, but you obviously can’t expect to make 100 pips in the next few hourly bars on 1hr on non-news. However there is nothing wrong with using a 25 pip stop from support and going for 50 pips at the next resistance (which fits into my risk tolerance of 25-50 pips for 1hr time frame). If the next resistance was only 15 pips away, you think I would take the trade? (Spoiler alert: No) You guys can skip the newbie folklore, I was looking for genuine answers of what range of sizes I should base my SL and TP on. Telling me the market is dynamic and changes is great and all, but does nothing to help me figure out general and logical SL and TP amounts on different time scales. If the market moved 100 pips on news, you think I should be looking at my 15M chart and say hmm, here’s support, I’ll set my TP at 100 pips? No! Because that sort of volatility will not continue after the news hype has faded in that sort of time scale. You’re right, it’s up to the trader to set dynamic SL and TP levels depending on what is moving the market AND you should put these in places where you will know you are right or wrong such as support/resistance, but having a general idea of about how much you’re looking to use as a stop loss and banking is smart because then you know when trades won’t fit your risk criteria. Like if you’re long and the next resistance is 20 pips away (take profit), but the support you put your stop under for protection is 35 pips away and you average a 50% win ratio, is this trade logical? No, because it doesn’t fit your RISK CRITERIA. No one said anything about limiting. Traders should be dynamic and change in an instant. BUT having an idea of a range to expect keeps you from taking STUPID trades.
BTW I am saying you can skip the newbie answers and give me genuine ones for a reason. And it’s not for arguments sake.
I have a sound win ratio with at least 1:1+ trading 1Hr time frame and built up a great strategy around it, enough to be running my own incubator firm. However, I am looking to build a strategy around the 4Hr time frame for when I want to spend less time on charts. I was looking to get an idea of what ranges of stop size and take profits would be ideal for that TF, because 20-50 pips WOULD NOT BE. I know macro betting plays a bigger role so the TP would be much more discretionary. But how big of a stop size is too big, how small is too small, ergo what should my range be for good trades on that time scale. I use support/resistance for entries and exits, but a range would make me be able to filter out bad trades.
[QUOTE=“3xfx;699924”]Maybe ATR. avg true range indicator would help?[/QUOTE]
It’s a great indicator in regards to current volatility, although most people who use ATR(14) without knowing why a dataset of 14 is relevant have no idea what they are doing. My problem with ATR is that it measures volatility, which is great, but can change on a dime. Different sessions will have different volatility so using 1.5x ATR value won’t do much good on a 4Hr chart. News will also distort the value. So it will only be able to map current volatility and not future volatility.
Honestly I can find my answer quite easily via measuring between support/resistance levels and placing my stop out of the reach of intraday “noise”. I have my own way of deciding what is and isn’t out of reach. It at least gives me a good idea of what I can expect although this number will constantly change. However, I can start building a good risk management system around it. I was hoping someone who has profitable experience with trading this time scale could tell me about what they look to expect, but it’s probably the wrong place to post. I don’t trade technical only and therefore I can’t build my system around the premise of support and resistance only. I trade order flow, when the orders stop flowing I am out. That’s why I need to be able to filter out the “stupid” trades that technicals throw out at me. And that’s why I need logical stop and exit area ranges.
The problem with 4hr is you’re essentially betting on a trend of good data out of one currency’s economy, or a trend of bad out of another. The good thing is that economy’s usually do tend to follow trend, and little blips here and there won’t make a super big difference. All in all though, it still is betting so it can go either way. The only way to logically trade this time scale is to make sure your trade is in line with the trend with a stop far away enough so that it won’t get affected by the blips.
Sorry for throwing all that crap at you haha. I traded E/U 1Hr after the consumer sentiment and got out like 30 mins ago due to my belief that volatility [U]could[/U] end up stalling after London traders go home. Great way to end the week and now I’m just killing time. Whereas, trading E/U right now on a 4Hr perspective is kinda iffy due to the uncertainty regarding a Greek deal with lenders and also unpredictable USD data making participants question whether the U.S. economy is stalling or not. The money just seems to be sidelined. Okay, okay I should stop.
Thanks for the article, an interesting read although a bit too arbritary and depending too much on statistics for my needs. In all honesty there is no such thing as a perfect stop. You choose your own stop whether that’s a certain distance away from entry, distance away from a chart level, a time stop, volatility stop, etc. They can all work as long as they avoid the so called “noise” (which btw isn’t really noise but from a longer-term perspective it is) that takes them out. Best way of achieving this is placing it far away from the reach of the daily noise and at an area where if it’s touched, you’ll know your analysis was wrong. My stop is placed far away and if price ever triggered it, I would know something has changed in market conditions. But I also closely follow markets (news, fundamentals, macro) so I don’t rely on my stop to take me out. I close out when it is time to be out because the fundamentals are changing. If this happens before my stop is hit, I’m out regardless. If it takes out my stop because of a big spike, I sleep well knowing I protected myself as well as I could. There’s no one way to skin a cat, and you’re right, you have to find what works best for you.
[QUOTE=“TheLastBear;699821”] +1 on the Jezzode. I keep telling trader to trade what is there in front of them and not what they want. Having a fixed/static approach in a dynamic environment makes no sense, at least not to me. In the end all the variables you can come up with need to be reflected in your trading strategy. Test things, adjust things and fine tune the strategy. This takes plenty of time, discipline and money. You learn by losing money (or investing money as I put it; you need to pay your tuition for a degree and the same applies here).[/QUOTE]
Trade what is in front of them. Yet you have a 250 pip/week journey… Lmao
Hey ForexForte, I love that question you asked. I understand where you are coming from…
Lemme just say that every variable that’s dynamic will always have a constant. I don’t know if you found something regarding your question yet. I found this lame. I’m sorry i cannot put a link i am a new user…
If you find anything share with me i’ll do the same
Ok. I use an EA from RunwiseFX. Very intricate at first. Deep Detail configurations. One of the things you can configure to display is the “Pips per Candle”. Life Saver. It puts the number of pips above closed candles. It puts things in perspective.
Your Question is wrong. Or not complete. We all need to be on the same page or at least be talking apples to apples.
There is Total pip movement (up and down) ABSOLUTE VALUE: [-5 + 4 = 9]
There is Actual pip movement (up and down) ACTUAL VALUE: [-5 + 4 = -1]
OK a candle can move up 2 pips and down 2 pips over and over and when candle closes it didn’t gain or lose value but may have had large amount of Total pip movement. Very much BS
Also OCHL {open, close high, low) Where do we count? The wicks, the bodies, the averages, the distance from High of 1 candle to the High of the next…
Also depending on where in the cycle of the current market will determine volatility. Opening market vs closing market.
You would have to adjust the totals every 1M,5M,15M…because Volume changes as time goes on through out the day. It is Dynamic. There are peaks and valleys in the amount of pips per time frame through out the day. The 8am totals are different from 4pm totals.
Hope I am making sense. I said all that because I tried to make an EA that uses that info and had to quantify what I really wanted. More info below. I think they based Daily numbers.
Based on my understanding of how I read the markets, price is fractal and so the same patterns play out on all time frames. As such rather than arbitrary pip values for each time frame it entirely depends on structure for me.
For sure it’s more dependent on Market Structure
I like yo go gorgeous from a Demand Zone to the next plausible Supply zone .
Usually it’s 3R and above so pip count dosen’t matter to me as such
In my opinion, you are looking at the market on a erroneous way.
First if all, timeframe means nothing… you can totally zoom the chart out or in, and you will see a completely different story
Second, each currency pair is different, some have very high volatility, and some are specially slow
Lastly, the range on pips will depend on how long you want your trades to last… are we talking minutes, hours, days, months?
So you first tell us what pairs do you trade, and what type of trader you want to be( scalper? Day trader? Swing? Investor?) Better tell us, how long can you spend looking at the chart on a daily basis?
