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Less than Five Pips

  • #1
  • First Post: Feb 22, 2021 4:34am Feb 22, 2021 4:34am
Anyone out there trading for less than 5 pips. I've been trying my hand at some 2-3 pip trades last few days. Curious of other peoples experience with trading for just a few pips. I can imagine this is a rather taboo subject, as it inherently has a very bad r/r. Still would like to get some feedback on it.
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  • #2
  • Feb 22, 2021 5:31am Feb 22, 2021 5:31am
I took this trade. Trying for two pips, my execution good have been better. Would have loved buying this pullback now, but I'm in, down about 8 pips, so now I just have to let it play out. Really need some more margin in my account. Probably jinxed it with this post. Oh well. Still you like to hear from people that are trading for less than five pips.
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  • #3
  • Feb 22, 2021 7:48am Feb 22, 2021 7:48am
I guess I better be right a lot. Seems like a daunting task at best.
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  • #4
  • Feb 22, 2021 3:31pm Feb 22, 2021 3:31pm
Quoting ZeroLag
Anyone out there trading for less than 5 pips. I've been trying my hand at some 2-3 pip trades last few days. Curious of other peoples experience with trading for just a few pips. I can imagine this is a rather taboo subject, as it inherently has a very bad r/r. Still would like to get some feedback on it.
Hi ZeroLag,

The problem with tiny pip targets is either the required win rate is too demanding and/or the round trip cost hurdle is too demanding.

Take an example illustration: you aim for 2 pips and risk 10 pips. You need to be right 5 times in 6 just to break even; and every loser means another 5 winners required to catch up. That is just too hard to keep up.

Let's say you try a different strategy and try for 5 pips at 1:1 risk reward. Now round trip costs will kill you: if a round trip costs 2 pips it means you need 7 pips for a winner and have only 3 pips room before being stopped out. Again, that is just too hard to maintain.

Now try 100 pip stop and a 1pt target. You'll "win" almost all the time but just 1 loser in 100 trades puts you underwater. This is long term hopeless.

Bottom line is that really small pip targets almost certainly cannot work over the long haul. At the minimum you have to have a big enough pip target to achieve both of keeping the round trip cost hurdle acceptable, and giving trades enough natural breathing room to come right before they are stopped out. There are much better and easier strategies out there you could pursue.
  • #5
  • Feb 22, 2021 11:15pm Feb 22, 2021 11:15pm
Quoting Oldtraderman
{quote} Hi ZeroLag, The problem with tiny pip targets is either the required win rate is too demanding and/or the round trip cost hurdle is too demanding. Take an example illustration: you aim for 2 pips and risk 10 pips. You need to be right 5 times in 6 just to break even; and every loser means another 5 winners required to catch up. That is just too hard to keep up. Let's say you try a different strategy and try for 5 pips at 1:1 risk reward. Now round trip costs will kill you: if a round trip costs 2 pips it means you need 7 pips for a winner...
Thanks for your reply. Your examples are spot on. I understand the math and its indisputable. Certainly we are at at disadvantage as small retail human traders. I still think there is an inherit edge is short term trading as far as making projections on where price is going. I'm going to experiment a bit further, and see if I can perhaps adjust my r/r to a more neutral level.
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  • #6
  • Feb 23, 2021 12:17am Feb 23, 2021 12:17am
i don't know about pips but i risk 3 to 1 reward and it's working fine to me , i made back test for one year and and traded 2 months live and results was ok to me.
one of famous traders admit he trading with risk:reward 3:1 , so he inspired me.
i have to admit that trading with good rr never worked with me even thought i tried a lot.
yes i can lose 3 trades and one winner will compensate me and more but in real life small losses keep eating and eating my account.
so trading with high win rate but bad rr not that bad if it's give you edge at the end.
but like anything else , need a lot of work and backtest so you can get the full picture
  • #7
  • Feb 23, 2021 1:16am Feb 23, 2021 1:16am
Quoting JsCave
i don't know about pips but i risk 3 to 1 reward and it's working fine to me , i made back test for one year and and traded 2 months live and results was ok to me. one of famous traders admit he trading with risk:reward 3:1 , so he inspired me. i have to admit that trading with good rr never worked with me even thought i tried a lot. yes i can lose 3 trades and one winner will compensate me and more but in real life small losses keep eating and eating my account. so trading with high win rate but bad rr not that bad if it's give you edge at the...
What time frame are your trading? How many pips are you looking for?
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  • #8
  • Edited 1:48am Feb 23, 2021 1:33am | Edited 1:48am
been in this trade for a hour an a half now, trying for 2, missed by a tad....

covered it for a pip almost

will wait for the next one.
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  • #9
  • Feb 23, 2021 1:36am Feb 23, 2021 1:36am
Quoting ZeroLag
{quote} What time frame are your trading? How many pips are you looking for?
m15, i don't work based on pips, but based on $ , if profit 50$ my sl is 150$ , i can't work with pips because some patterns need 50 pips for hit target others need 12 pips. So i don't work using pips
  • #10
  • Edited 2:10am Feb 23, 2021 1:41am | Edited 2:10am
Quoting JsCave
{quote} m15, i don't work based on pips, but based on $ , if profit 50$ my sl is 150$ , i can't work with pips because some patterns need 50 pips for hit target others need 12 pips. So i don't work using pips
Understood, makes perfect sense.

I don't know why I settled on 2-3 pip targets, it was random I think, perhaps it seemed most doable. But I may experiment with expanding that. My SL placement was also random, generally its 10x my target I think, basically I have it as an emergency.
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  • #11
  • Feb 23, 2021 2:14am Feb 23, 2021 2:14am
If your trading costs are say 0.7 pips (spread &/or commission) and you are only looking for 2 pips, then you are paying 35% of potential profit every trade you win, and on top of every trade you lose.

-that is quite the handicap to overcome..
  • #12
  • Feb 23, 2021 2:23am Feb 23, 2021 2:23am
Quoting BubaYaga
If your trading costs are say 0.7 pips (spread &/or commission) and you are only looking for 2 pips, then you are paying 35% of potential profit every trade you win, and on top of every trade you lose. -that is quite the handicap to overcome..

Indeed, and my spreads are much larger than that right now. I'm closer to 100-150%. Madness, I would certainly need better spreads to make it even remotely feasable.
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  • #13
  • Feb 23, 2021 2:29am Feb 23, 2021 2:29am
Quoting ZeroLag
been in this trade for a hour an a half now, trying for 2, missed by a tad.... covered it for a pip almost will wait for the next one. {image}
this would have been a disaster...almost no room for error

lucky
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  • #14
  • Edited 8:47am Feb 23, 2021 8:27am | Edited 8:47am
Quoting ZeroLag
{quote} this would have been a disaster...almost no room for error lucky {image}
that last one got away from me

thats twice now

guess that chart below proves how difficult it would be to adhere to a negative r/r
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  • #15
  • Feb 23, 2021 10:12am Feb 23, 2021 10:12am
Does that count? Its demo account where i have been testing my system. Started this on feb 8
Last few weeks of 1min scalping. Manual entry and EA tp exit.
No SL and because of that few trades, 2-3 or so have been gone longer then i have wanted but not so bad to place SL. Its all about testing and finding limits
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  • #16
  • Feb 23, 2021 10:17am Feb 23, 2021 10:17am
Quoting ZeroLag
Anyone out there trading for less than 5 pips. I've been trying my hand at some 2-3 pip trades last few days. Curious of other peoples experience with trading for just a few pips. I can imagine this is a rather taboo subject, as it inherently has a very bad r/r. Still would like to get some feedback on it.
in the Trading Systems forum, there is a thread called Highest Open Lowest Open

Go there, they teach all about picking up pennies on the train tracks

It takes a lot for me to IGNORE you, but you can try.
  • #17
  • Feb 23, 2021 10:24am Feb 23, 2021 10:24am
Quoting Ylts
Does that count? Its demo account where i have been testing my system. Started this on feb 8 Last few weeks of 1min scalping. Manual entry and EA tp exit. No SL and because of that few trades, 2-3 or so have been gone longer then i have wanted but not so bad to place SL. Its all about testing and finding limits {image} {image}

yea, that counts....nice
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  • #18
  • Feb 23, 2021 10:25am Feb 23, 2021 10:25am
Quoting Erebus
{quote} in the Trading Systems forum, there is a thread called Highest Open Lowest Open Go there, they teach all about picking up pennies on the train tracks

lol, I'll check it out...thanks...
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  • #19
  • Feb 23, 2021 3:02pm Feb 23, 2021 3:02pm
Quoting Erebus
{quote} in the Trading Systems forum, there is a thread called Highest Open Lowest Open Go there, they teach all about picking up pennies on the train tracks
  • #20
  • Feb 24, 2021 2:46am Feb 24, 2021 2:46am
It's damn tough to come back after a big hit. To have 10 wins wiped out is rough. Maybe algos have an easier time regrouping.
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