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pip mark up

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  • First Post: Sep 20, 2006 11:26am Sep 20, 2006 11:26am
I just want some opinion from every one when they set up their pip stop/lose when trading e.g 3-10pip or prior to the previous day of the currency trade... thank
Personally, I find my trades are becoming more successful the further the stop-loss... Not as great for risk/reward ratio, but make sure you get a good entry and give a good 20+pips (30 much of the time) for any stop-hunting or irregular volatility.
Good point. r:r ratio is one of those things designed to make people lose money.
Quoting Lifecycle
Personally, I find my trades are becoming more successful the further the stop-loss... Not as great for risk/reward ratio, but make sure you get a good entry and give a good 20+pips (30 much of the time) for any stop-hunting or irregular volatility.
IMHO w/o an understanding of r:r you will struggle. Using r:r can help u screen what trade to take. If I have two trades. One w/ 1:3 r:r and 2nd at 1:1.5. All things being even i'll take the 1:3 and pass on the 1:1.5. W/o a means of determining r:r you are trading blind.

Quoting jamie12
Good point. r:r ratio is one of those things designed to make people lose money.
In trading, there is no bullshit. You either make money or you don't.
This is how I understand and determine the r:r. Not a trade recomendation by any means.

The below chart is the 1 Hour USD/CHF. The two yellow lines at 1.2487 and 1.2482 is my determined support zone. The yellow line at 1.2525 is the projected take profit.

If I put on a trade right now and buy at 1.2494 my s'l is determined by my support zone. I decide i'll place a stop at 1.2482 (bottom of the zone. My risk is 12 PIPS. my TP is 1.2525 or 31 pips above my buy. (Spreads are not figured in this calc for simplification, though one must figure them into a real calc.)
My r:r determined by dividing my potential profit by risk:
31/12 = 2.58
So I have a 1:2.58 ratio on the trade.

How to get a beter r:r. Wait and buy at 1.2491. Risk is now 9 PIPS adn TP is 34 PIPS. (You don't adjust the risk or the TP to improve the r:r, you adjust the buy)
my r:r is improved to:
34/9 = 3.78, or a 1:3.78 ratio.
If my intention is to trade this pair then I would wait till price reaches 1.2491 as IMHO anything less than a 1:3 r:r is not worth trading.
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In trading, there is no bullshit. You either make money or you don't.
Quoting mrgreen
IMHO w/o an understanding of r:r you will struggle. Using r:r can help u screen what trade to take. If I have two trades. One w/ 1:3 r:r and 2nd at 1:1.5. All things being even i'll take the 1:3 and pass on the 1:1.5. W/o a means of determining r:r you are trading blind.
How much you win or lose is by far the least important thing in trading. What matters is how much you win/lose and how often. R:R ratios on individual trades mean nothing.
Individual trades in general mean nothing.

What I am trying to point out is that those individuel trades add up. If u consistenetly take low r:r trades your agregate ratio is gonna be lower than if you take higher ratio trades.

If I have a system that produces consistent 50% winning trades I want that 50% trades to be around a 1:3 ratio profit. By taking lower r:r trades my ratio is gonna be 1:1.5 or less. My time is better spent looking for higher ratio trades. With the proper r:r one can have a system that produces less than 50% winners and stil be ahead. (Proper MM is a must of course)
This is just my opinion. One ultimetly determines their own trading method.

Quoting jamie12
How much you win or lose is by far the least important thing in trading. What matters is how much you win/lose and how often. R:R ratios on individual trades mean nothing.
In trading, there is no bullshit. You either make money or you don't.
I don't understand why people set up to win only a fraction of the time. You can consistently risk 3 to win 1 and still be profitable. Every one says 'oh, you have to win 80% of the time' or something like that. My response is , 'so?'.

Quoting mrgreen
Individual trades in general mean nothing.

What I am trying to point out is that those individuel trades add up. If u consistenetly take low r:r trades your agregate ratio is gonna be lower than if you take higher ratio trades.

If I have a system that produces consistent 50% winning trades I want that 50% trades to be around a 1:3 ratio profit. By taking lower r:r trades my ratio is gonna be 1:1.5 or less. My time is better spent looking for higher ratio trades. With the proper r:r one can have a system that produces less than 50% winners and stil be ahead. (Proper MM is a must of course)
This is just my opinion. One ultimetly determines their own trading method.
Quoting mrgreen
Individual trades in general mean nothing.

What I am trying to point out is that those individuel trades add up. If u consistenetly take low r:r trades your agregate ratio is gonna be lower than if you take higher ratio trades.

If I have a system that produces consistent 50% winning trades I want that 50% trades to be around a 1:3 ratio profit. By taking lower r:r trades my ratio is gonna be 1:1.5 or less. My time is better spent looking for higher ratio trades. With the proper r:r one can have a system that produces less than 50% winners and stil be ahead. (Proper MM is a must of course)
This is just my opinion. One ultimetly determines their own trading method.
I used to trade 1risk:1reward with a 75% success rate. I'd rather have a 1risk:3reward with a 40% success rate now. My max reward if I were right 100% of the time on a 1:1 is 10 reward /10 risked. Now I can have 10 reward and only be right 50% of the time on a 1:3. I like not having to be right so much. Isn't that the whole point of technical analysis; being able to identify risk in higher probability trades?
The casino industry understands this very well. Sure u can risk $3 to win $1, but why? After 1 loss it will take u 4 wins to get back to even. Unless of course you decide to risk $9 to win back your $3. If one trades an 80% winning stategy w/ this type of MM and r:r and they will be very hard pressed to stay even.

Quoting jamie12
I don't understand why people set up to win only a fraction of the time. You can consistently risk 3 to win 1 and still be profitable. Every one says 'oh, you have to win 80% of the time' or something like that. My response is , 'so?'.
In trading, there is no bullshit. You either make money or you don't.
If you can trade with 1:1 75% of the time, you have found the holy grail.
Quoting Atrainer
I used to trade 1:1 with a 75% success rate. I'd rather have a 1:3 with a 40% success rate now. My max reward if I were right 100% of the time on a 1:1 is 10 reward /10 risked. Now I can have 10 reward and only be right 50% of the time on a 1:3. I like not having to be right so much. Isn't that the whole point of technical analysis; being able to identify risk in higher probability trades?
Quoting mrgreen
The casino industry understands this very well. Sure u can risk $3 to win $1, but why? After 1 loss it will take u 4 wins to get back to even. Unless of course you decide to risk $9 to win back your $3. If one trades an 80% winning stategy w/ this type of MM and r:r and they will be very hard pressed to stay even.
you got my risk:reward backward. Read edit
Quoting jamie12
If you can trade with 1:1 75% of the time, you have found the holy grail.
Trading a MACD with the current and larger trend will give you close to that won't it?
My response was to the post by Jamie12, not yours. I am in agreement with your point.
Quoting Atrainer
you got my risk:reward backward. Read edit
In trading, there is no bullshit. You either make money or you don't.
Quoting atobev
I just want some opinion from every one when they set up their pip stop/lose when trading e.g 3-10pip or prior to the previous day of the currency trade... thank
Hey mate,

I use a 10pip stop
Quoting mrgreen
The casino industry understands this very well. Sure u can risk $3 to win $1, but why? After 1 loss it will take u 4 wins to get back to even. Unless of course you decide to risk $9 to win back your $3. If one trades an 80% winning stategy w/ this type of MM and r:r and they will be very hard pressed to stay even.
Trading strategies come down to this. It is all about getting an edge on the odds. If someone asks, "Are you making money?" I like to answer with a, "Probably." If my system gives me an edge, and my money management gives me an edge, then shouldn't I be profitable if I follow the rules? That's exactly why the casinos won't let someone that has taken away their edge gamble. Because then it isn't gambling, it's investing.
I don't know, but if you can win 75% of the time with a r:r of 1:1, you should borrow as much money as you can from everywhere and trade it for a year. You will never have to worry about money ever again.
Quoting Atrainer
Trading a MACD with the current and larger trend will give you close to that won't it?
I am not going to insult your intelligence by exaplining the basics of probability, but you are wrong. This is not an opnion, it is a mathematical fact. If you can win 1 80% of the time and lose 30 20% of the time, you will be hugely successful. Sure, if you have one loss you have to then win three times to break even, which is where you are getting stuck.

Quoting mrgreen
The casino industry understands this very well. Sure u can risk $3 to win $1, but why? After 1 loss it will take u 4 wins to get back to even. Unless of course you decide to risk $9 to win back your $3. If one trades an 80% winning stategy w/ this type of MM and r:r and they will be very hard pressed to stay even.
Quoting jamie12
Good point. r:r ratio is one of those things designed to make people lose money.
Quoting jamie12
How much you win or lose is by far the least important thing in trading. What matters is how much you win/lose and how often. R:R ratios on individual trades mean nothing.
Quoting jamie12
I don't understand why people set up to win only a fraction of the time. You can consistently risk 3 to win 1 and still be profitable. Every one says 'oh, you have to win 80% of the time' or something like that. My response is , 'so?'.
Quoting jamie12
I am not going to insult your intelligence by exaplining the basics of probability, but you are wrong. This is not an opnion, it is a mathematical fact. If you can win 1 80% of the time and lose 30 20% of the time, you will be hugely successful. Sure, if you have one loss you have to then win three times to break even, which is where you are getting stuck.
A couple more good quotes and we'll be able to release a "best of" CD.
Quoting jamie12
I am not going to insult your intelligence by exaplining the basics of probability, but you are wrong. This is not an opnion, it is a mathematical fact. If you can win 1 80% of the time and lose 30 20% of the time, you will be hugely successful. Sure, if you have one loss you have to then win three times to break even, which is where you are getting stuck.
20% is a good return on risk. You can make great money over time this way. The only problem I have with trading this way is that you HAVE to maintain 80% W/L ratio or your profitability slips away. Eight steps forward, 6 steps back, or win 80/lose 60, no matter how you look at it is only good if you have a solid system that you have backtested and forward tested to be consistent, and have few large drawdowns. It works. If your system has any discretionary input, you could have problems.

The reason I now like a 1:3 strategy, is that I can still be wrong 70% of the time and still make 20%. For a discretionary trader like myself, who thrives at 40-60%, it makes having a bad streak more forgivable. I would have to lose 80% of the time to take a 20% loss. On your 3:1, if you only win 70% of the time (think 7 out of 10 trades) you lose 20%. I would rather have the leeway, as well as the potential to have room to grow.
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