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Darkstar Feb 2, 2007 11:02am | Post# 21

Um...do you mean net versus gross? If you only included gains without losses, that's called cheating. LIke only counting losses on your taxes but ignoring the gains, or reading a 10k and only the revenues, but not the net after expenses.

I assume the original question is for net, not gross.

Second, I stand by what I say earlier about pips not $ gains. Though others are more experienced with me.
If I make 100 pips in a mini, and you make 10 pips in a standard, 10x$10 equals 100 bucks. 100 x $1 is $100. And if you did more than one lot, you'd always win over me.
In that case, how is it a fair question? I will never make more, and I will have had to make 100 pips compared to your 10 just to keep up.
I'd love to have it made so I only need to make 10 instead of 100 pips, but isn't 100 pips the bigger number? Why doesn't the 100 win?
Should the deck be stacked against EVERYONE who is trading with lower money accounts?

If I'm trading in stocks, 10% is a loser for small accounts, and 10% is a huge winner for larger accounts. 10% doesn't cover commision sometimes. I like pips.

I stay with the original question. What is your NET pips. If everyone did my trade with however many lots, your pips would be the same, but your account will vary. And I agree with...i forget the posters name but has the Tiger Woods Avatar. You can have positive pips and negative account, but aren't you halfway there!

So Net this 24 hours, 5 pips. I shouldn't have taken an ozzie/dollar trade last night...those pairs don't move well enough for shorter plays. But I did good trading some binaries today! 180 and 300% gains. Doens't matter my $ amounts. That's per contract.5 contracts will pay more than 1 everytime, that factor skews the question.
Not all of us start with the same deposit.
The problem you outline is precisely why the net number of pips is irrelivant as well. The guy trading 5 times as many contracts may make 5 times the money you do, or he may not. If your trading 1 contract with a 500pip target and he is trading 5 contracts with a 100 pip target, you'll both make the same money.

What everyone is trying to point out is that the solution being outlined is just as bad as the problem. You may have made 300% today on 180 pips, but I would almost guarantee your taking on more risk then your system can support. It's all about return on risk.

What are you risking to make that return? 1% of your account? 10%? 50%? If your risking even 5% of your account, without a wicked winrate, your going to get killed long before you have a chance to accumulate enough pips to mention. There is a very simple formula that is used to compare systems, and when you understand it your returns will begin to improve dramatically.

Lets use a hypothetical trading system, with 20 pip stoplosses and 40 pip takeprofits.

Start out by defining an R variable of 1. The 20 pip stoploss is equal to R1. That 20 pips can be 1% of your $100 account, 5 contracts times 20 pips, or the GDP of china. The metric you use to define R1 is irrelivant but R is always 1.

We need another variable called P. P is the multiple of Rs we win with a winning trade. Divide the number of pips you win on your average winner by the number of pips you lose on your average loser. In this case P is 2. 20/10=2

Now whats the winrate of the system? I don't know and neither do you. The only way you can figure it out is to test the system over 100+ trades. If you haven't done that, then there is no point in talking about how good or bad a system is. Because this is hypothetical, lets say after 200 trades our winrate is 60%.

Ready for for the solution to your problem?

Multiply P by the number of winners. 120 X 2 = 240

Multiply R by the number of losers. 80 x 1= 80

Subtract your net R from your net P. 240-80= 160

Then devide that number by the number of trades in the sample to find E or the expectancy of the system. 160/200= 0.8

That number is the key. What does it represent? The expected return your system will generate over a large sample of trades. You will make $0.80 for every $1 you risk.

It doesn't matter if you have a $1m account risking 0.1% or a $100 account risking 50%, that number won't change.

The last factor you need to look at is the frequency of trades. Our sample was 200 trades, so lets multiply our E times 200. 0.8X200= 160

That is your R multiple over 200 trades. We express that as 160R. But how long did it take you to make those 200 trades? A week? A month? A year? A system that generates 160R in 1 week is 52 times more profitable then one that generates 160R over 1 year. If you don't understand why, just do the math. I highly reccommend you try plugging in different variables to see how they perform.

So if you want to ask people a relevant question that might in fact help you to gauge your progress as a trader, ask them there average R over a given time period. If they can't answer it, their opinion isn't even worth hearing because they have no idea what their doing.

Luck be with you.

Note:/ These calculations are not just for explicitly defined systems either. If your a discretionary trader you just utilize your avarages for wins and losses over all your trades. Don't let yourself off the hook because the variables are always changing.

hidethereal Feb 2, 2007 11:06am | Post# 22

On the flipside, if gains are taxed in the US like stocks and other income, I get taxed on pips if I withdrawl the money or lose it all on January 2nd regardless if I ever touched a cent. That stinks. It should be like 401k's and IRA's, I should be taxed if I actually get the money dispearsed! But anyway....
What I learned this week, a mini-account doesn't pay the bills anyway, so take the pips away from me, and I got nothing! :surprised Least I can work on it to pay the bills someday if I am getting some pips from somewhere.

Now if I do good trades with one lot, and I experiment with a mini lot, I can lose more pips and make money. But I'd rather put the mini's in the experimental column anyway in that case instead of demo'ing it.
I hope one day you understand what the intention of my post was.

Kwackers Feb 2, 2007 11:27am | Post# 23

After problems with oanda and FXCM freezing and then missing limits, i opened an account with FXsol which is an awesome platform in my opinion.

I've got a $10,000 and it's set as $1 a pip (not sure how to change, but i wanted $2-5 a pip)

461 pips at $1.00 a pip so $461 since wednesday morning

PipGod Feb 2, 2007 2:24pm | Post# 24

FsSol
>Trading Tools
>Account Rules

Be Very Careful :

PipGod Feb 2, 2007 2:26pm | Post# 25

Closed trades at 1:30 pm Feb 2nd, 2074 pips on minilots.
Positive and negative trades.

gummiebear Feb 2, 2007 7:40pm | Post# 26

Ummmm.... 400, I think thats close.

Uhhhhh, Yea!

sccz97 Feb 4, 2007 3:50am | Post# 27

just had to post smthing here. I've also noticed ppl taking pride in positng how many pips they've made. If they're making money, I'm happy for them but as many are not concentrating on trading a single pair, pips can often be misleading. If I'd made 10 pips trading 1m cable and lost 9 pips trading 1m eurgbp, I've actually lost money. IF you're trading roughly equiv $ amounts in your base ccy for each trade then the number of pips you've made/lost might be more representative of your pnl but I would hardly say it's an accurate guage of performance.

The only thing that's important is your %net return (whether it's daily, weekly, monthly, yearly or since inception), and that is what you should be focussing on. Everything else in the real world is meaningless. You ever seen a fx fund posting monthly performance in pips? I think not

PipGod Feb 4, 2007 12:21pm | Post# 28

just had to post smthing here. I've also noticed ppl taking pride in positng how many pips they've made. If they're making money, I'm happy for them but as many are not concentrating on trading a single pair, pips can often be misleading. If I'd made 10 pips trading 1m cable and lost 9 pips trading 1m eurgbp, I've actually lost money. IF you're trading roughly equiv $ amounts in your base ccy for each trade then the number of pips you've made/lost might be more representative of your pnl but I would hardly say it's an accurate guage of performance.

The only thing that's important is your %net return (whether it's daily, weekly, monthly, yearly or since inception), and that is what you should be focussing on. Everything else in the real world is meaningless. You ever seen a fx fund posting monthly performance in pips? I think not

30% RIO.

Kwackers Feb 4, 2007 9:07pm | Post# 29

just had to post smthing here. I've also noticed ppl taking pride in positng how many pips they've made. If they're making money, I'm happy for them but as many are not concentrating on trading a single pair, pips can often be misleading. If I'd made 10 pips trading 1m cable and lost 9 pips trading 1m eurgbp, I've actually lost money. IF you're trading roughly equiv $ amounts in your base ccy for each trade then the number of pips you've made/lost might be more representative of your pnl but I would hardly say it's an accurate guage of performance.

The only thing that's important is your %net return (whether it's daily, weekly, monthly, yearly or since inception), and that is what you should be focussing on. Everything else in the real world is meaningless. You ever seen a fx fund posting monthly performance in pips? I think not
My pips were GBP/USD only, so thats nearly 5% return last week.

But your right a pip is worth nothing without money management

PipGod Feb 6, 2007 4:24am | Post# 30

Money management, top of the MUST DO list.

PipGod Feb 12, 2007 7:34pm | Post# 31

With multiple lots and multiple pairs placed at strategic times and Prices, 8,400 pips!

WHTenn Feb 12, 2007 8:18pm | Post# 32

On the flipside, if gains are taxed in the US like stocks and other income, I get taxed on pips if I withdrawl the money or lose it all on January 2nd regardless if I ever touched a cent. That stinks. It should be like 401k's and IRA's, I should be taxed if I actually get the money dispearsed! But anyway....
What I learned this week, a mini-account doesn't pay the bills anyway, so take the pips away from me, and I got nothing! :surprised Least I can work on it to pay the bills someday if I am getting some pips from somewhere.

Now if I do good trades with one lot, and I experiment with a mini lot, I can lose more pips and make money. But I'd rather put the mini's in the experimental column anyway in that case instead of demo'ing it.
Actually, your taxed on what you have in your brokerage account from trades (not the initial amount you funded your account with when you opened the account), not when you withdraw your money. That is a bad misconception.

WHTenn Feb 12, 2007 8:24pm | Post# 33

Question
 
With multiple lots and multiple pairs placed at strategic times and Prices, 8,400 pips!
Day? Week? Month? Year?

PipGod Feb 12, 2007 8:39pm | Post# 34

Day? Week? Month? Year?
Trades placed on the 8th (two days ago) and closed before now. I had a few negative ones, but more positive. 62.2%

The losses are smaller, the gains are large.

WHTenn Feb 12, 2007 8:48pm | Post# 35

Trades placed on the 8th (two days ago) and closed before now. I had a few negative ones, but more positive. 62.2%

The losses are smaller, the gains are large.
The question was in reference to your 8,400 pips. How long did it take you to make these? Also, what does 62.2% mean?

PipGod Feb 12, 2007 8:56pm | Post# 36

The trade were two days old or less. They are no closed. Some were scalps, some one day, and the rest two day. Some were positive and some were negative. The positive trades were very large. The negitive were very small. Although this is not a good indicator, 62.2% means that 55 positive trades out of 83.

PipGod Feb 12, 2007 9:01pm | Post# 37

My error. 66.2% not 62.2%
Just a correction. The % really doesn't mater.

PipGod Feb 12, 2007 9:06pm | Post# 38

I am heavy on all the Yens short.

PipGod Feb 13, 2007 6:09pm | Post# 39

7,143 Pips, 69.4%

PipGod Feb 15, 2007 6:23pm | Post# 40

I am heavy on all the Yens short.
Check you charts. Now that's a PAY DAY.

$44,912.10



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