Maximum monthly pip level?

system · December 16, 2012, 6:13am

The forum wouldn’t allow me to edit my post, But I wanted to add this: I probably spend more time on defining an appropriate Money management rules for a new system than on the system itself. So I am only interested in the outcome of the trading system (Pips). But that is just me.

Note: The 200:1 blew up the account in three trades. This is diff from the 1255%, but I calculated the lots per trade and not the $ value per pip in the trade. Due to quickly calculating multple MM systems for this post I made this error.

forex4worth · December 16, 2012, 7:47am

paw3000:

your approach is not the correct one. As soon as you realize it would be better for you as a trader and your account.
in forex trading profit means pips x lot size. true, but there is something more.
not only you can increase your account % hunting less pips, you can even increase it while you are losing pips.
for example imagine you trade 2 strategies 1 long term and other intraday. you are risking 2% of your initial monthly balance/trade with both strategies. In one month the long term strategy lose 2 trades of 500 pips each one so you are now down 1000 pips=4% of your account. however that was a good month for your intraday strategy, using a 1:1, R:R you won 5 trades of 10 pips each one.
so in this month you would have lost 950 pips but increased your account a 6%.
as Dra said its all about account % not about pips.

so a guy who managed to get 450 pips with 70 pips dd but is not trading with his trading style is not a good trader?
I will put another example
the trader 1 started trading forex with 100k $,. after 10 years his account balance is 101k, he has earned a total of 10k pips, but his maxim dd was a 92% of his account
now a trader 2 started with 100$. after the same 10 years his account balance is 100k, he has earned a total of 1200 pips with a max dd = 10% of his account.
assuming both trade using the same trading styles, according to themselves.
I will ask you again, who is a better trader?
or on in other words if you should let one of them trade your money who of them you would chose? the 1 who promise you a 1% returns in 10 years with a 92% drawdown, or the n2 who promise you a 100000% returns in 10 years with 10% drawdown? you would chose the n1 saying HEY! i would earn 8,8k more pips than with n2? I dont think so.

just trying to help you understand why i think you are wrong. sorry if this sounded rude, not my intention at all.

Thats not rude at all) We are here to share our knowledge for helping out each other not for offending each other.I wanna say thanks for your contribution to this thread.

forex4worth · December 16, 2012, 8:27am

Thank you)) I think we both have a same trading style and a trading strategy but we can,t say other people wrong because as sandybeach said indeed you are a winner if you are making money at the end of the month with some good money management. Offcourse such a person can,t agree because he is actually a successful trader according to his trading style.But i think as a professional trader we should think about boosting our performance over time.And as i see things and according to my trading style i can improve my performance by increasing my ability to pull the maximum no of pips from the volatile market .I have a little time tested evidence for supporting my claim.I am a day trader and i only trade during high volatile market hours.I daily trade during the 1 hour tokyo/london overlap and the london/new york overlap which is the biggest and best for trading forex major pairs.I start trading with the real money about one month ago but before starting with the real money i traded on a demo account for two months.In this time period i noticed one thing that at least 200-300 pips are available to me during those trading hours and i tried to increase my daily pip level on a daily basis and so far i managed to make 28-40 pips daily.Since i am new to forex trading i am trading on 0.50 lot size.I can,t increase my lot size and i can,t open multiple trades at one time because i dont have much balance to risk.I am progressing everyday and i believe with the passage of time i shall be able to pull at least more than 100 pips daily.I am concentrating on my base once its established i will just increase my lot size for increasing my pip value for enjoying profits in a long term.The time duration of my daily trades is between 20 to 30 minutes.I believe i am utilizing by time and effort in its best way.In forex its so hard to agree with each other but the one who is performing best according to his style is called the best.Just stick to one style which is better for you.I think switching to different trading style will make you confuse and you will always catch the loosing end( i expereinced this)

paw3000 · December 16, 2012, 6:30pm

IdeFX:

There is a slight difference between each of them, but the trade results stay the same. (This is what paw3000 als refers to). So I am not really interested in what the % return is, as I will decide my own Money management rules when applying a trade system. I just like to see how many pips a system generates as my lot size will cap at a certain time, meaning that each profit pip would be one max lot value unit.

So I agree, when building your equity Only % return or pip doesn’t suffice. But when you trade a maximum pip size based on the system you use than Pips says it all for me.

I understand that the opinions differ. This just work for me and I thought a more worked out example would help in having getting another point of view from the “Pips rules!” side of the world.

I’m with you, I have always defended the separation between a system and mm, i think mm is a trader choice, and should be adapted for every personality and risk tolerance, but it shouldnt be considered part of the strategy itself. we cant say a system doesnt work just because the trader uses a bad mm. if this is the case it would be a trader issue not a system problem. And this is another reason why i cant agree with this phrase:

basically because we can take 2 trades with the same system 1 trading the eurjpy the other the eurgbp. the first takes excesive risks, and double his lots every time he mades a losing trade. The second trading with good mm, and controlling risks.
after 5 month the n1 has blown his account when the 2nd has increased it a 55%. However the n1 could have made more pips than n2 because the fact that he had been trading a more volatile pair.

this last post was great i really liked it. I think we have slightly different stand points, but i understand and partially agree with you. I would say that the best trader would be this one who can pull of the maximum profit from the market according to his trading style in a given period. However the maximum profits would not be only determined by how much pips he can make, they will also determined by the drawdowns he has. I think that the key is the relation you have between your profits and your drawdowns. if increasing the number of pips x2 means having a dd x10 times bigger ( counting in pips) i would say that this is not a good improvement. I chose my lot size based on my max drawdowns. and the max dd is what indicates me how much i can earn with a given strategy, in conjunction with the overall pips it makes. so for me making more pips with more dd doesnt means winning more money. I think the risk should have more weight that the profit you can make if you wanna survive in this game. i’m more mechanical than discretionary trader and i have spent so much time in backtest, forward test and mm developing for my systems, so i understand that most discretionary traders could have a diferent point of view.

well, i can make an stupid comparison with this. I would say you have one orange and try to squeeze it to get the max juice possible. I have an orange and I try to squeeze it to get the max juice possible without getting my hands dirty.
yes, it sounds stupid.