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Is 6 pips a day enough for you?

  • #21
  • May 30, 2008 7:48pm May 30, 2008 7:48pm
Quoting Rosscub
I average a measley 1 pip a day, but that returns on average about 5% a month. This month I had 26 trades with 73% positive. Average gain was 2 pips; average loss was 2 pips. I never had greater than 1.5% peak to valley drawdown.

My point is that small gains can produce a reasonable, consistant return.

Trading is a business.

This is what I am talking about, your method sounds similar to what I do, you should never have 50% drawdown like TDion mentioned earlier. Max loss per trade should be no more than a few pips, taking minimal high probability trades there is no reason why you cannot get a hit rate of 80% + with practice
  • #22
  • May 31, 2008 12:22am May 31, 2008 12:22am
Quoting magnumfreak
Instead I just look for the most ideal setups and then make my entry. The way I trade now is much easier on the heart. And when you average it out over a month, I make far more than 6 pips a day even if you included the weekend.
Very true Magnumfreak.

I also understand that working out different scenarios is part of the learning process. But there's so many threads about this topic that it's mind boggling.
Not all sins are created equal
  • #23
  • May 31, 2008 3:27am May 31, 2008 3:27am
Hi..

Not sure if anyone has asked these questions yet...

FxRichard... I assume your not using a demo account with this method...and how long have you been trading this way....

is slippage on a trade a problem ?
  • #24
  • May 31, 2008 3:55am May 31, 2008 3:55am
Quoting Lohr
Why is that?

I recently started a thread about this very subject and got a few replies, most of which were meaningless and deleted by the administrators here at FF. But no answers!

10 pips a day will make you a million in a year starting with one lot. And yet, and yet!

Theory, never action. I tried to find out WHY this never happens. It's very odd because it seems so simple. Van Tharpe would naturally say psychology. Perhaps, or fate, or deals with the Devil is a prerequisite, or or or...

I'd like to know what's up that simple compounding of modest daily profits would lead to 10 times better returns than even Larry Williams, who has the greatest return to date.
If I'm not mistaken, Williams' was in a contest. There's no comparing a trading contest with trading your own money. I'd be more impressed if someone would produce Williams' trading results for his or other's money instead of always mentioning the results of a trading contest.

Trading is all about psychology. Accounts are blown because of bad decisions, not because you shorted the Eur when it went up.
  • #25
  • May 31, 2008 6:50am May 31, 2008 6:50am
FXRichard,

You are correct in that we are both scalpers; although, our entry decisions are probably a little different. I know of linuxtroll's scalping method, but my system is a breakout strategy that uses the daily, hourly, and 15 minute charts. I don't use any indicators, and I enter the market with limit orders. I have a stop/limit of 5 pips, which is a 1:1 ratio (equals 1.5% of my total margin). I usually exit the market before either is hit.

Now, there is a lot of talk of being able to gain 20, 10, 5, or even 1 pip a day, but in reality, that's just not realistic. As a trader, you are going to have losing days. What is realistic it to have an average of 5,10, or however many pips a day. I think this is what a trader should examine.

Begin by setting yourself a realisitic goal that pertains to your style of trading, so for me this may be 5 pips a day. Don't forget, you also need to define how much you are willing to lose in a day (this is also 5 pips for me). Also set weekly and monthly goals. After a couple of months of trading, you can start to see what your average is in days, weeks, and months. You may find that you need to lower your goal to make it more obtainable, or you may need to raise the bar if you feel that you have more potential (usually it is the first one for most FX traders).

Do you see the difference here? I hope someone finds this helpful.
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  • #26
  • May 31, 2008 7:27am May 31, 2008 7:27am
Quoting Rosscub
FXRichard,

You are correct in that we are both scalpers; although, our entry decisions are probably a little different. I know of linuxtroll's scalping method, but my system is a breakout strategy that uses the daily, hourly, and 15 minute charts. I don't use any indicators, and I enter the market with limit orders. I have a stop/limit of 5 pips, which is a 1:1 ratio (equals 1.5% of my total margin). I usually exit the market before either is hit.

Now, there is a lot of talk of being able to gain 20, 10, 5, or even 1 pip a day, but in reality, that's just not realistic. As a trader, you are going to have losing days. What is realistic it to have an average of 5,10, or however many pips a day. I think this is what a trader should examine.

Begin by setting yourself a realisitic goal that pertains to your style of trading, so for me this may be 5 pips a day. Don't forget, you also need to define how much you are willing to lose in a day (this is also 5 pips for me). Also set weekly and monthly goals. After a couple of months of trading, you can start to see what your average is in days, weeks, and months. You may find that you need to lower your goal to make it more obtainable, or you may need to raise the bar if you feel that you have more potential (usually it is the first one for most FX traders).

Do you see the difference here? I hope someone finds this helpful.
I agree 100%, like I mentioned earlier I started this thread mainly for entertainment reasons and open to discussion. One of my strategies used to be a breakout system with limit orders as well it worked well but needed further refining. Personally my goal is not a set number of pips per day, my goal is to be profitable whether that be 1 pip or 100 pips each day.
  • #27
  • May 31, 2008 5:18pm May 31, 2008 5:18pm
Quoting fxRichard
I agree 100%, like I mentioned earlier I started this thread mainly for entertainment reasons and open to discussion. One of my strategies used to be a breakout system with limit orders as well it worked well but needed further refining. Personally my goal is not a set number of pips per day, my goal is to be profitable whether that be 1 pip or 100 pips each day.
FXRichard,

There are certain keys to reaching your goals. One of them is that they should be specific; otherwise, how will you really know if you have obtained them. "To be profitable" is a worthy goal, but it's not specific enough. You should right down your goals and make them specific as possible. Know what you are working toward and how you are going to work to get there.

Also, make sure your goals are obtainable. If you are a scalper, 100 pips a day is going to be a tough row to hoe, so why consider it? You may be up 20 pips, but out of greed you shoot for 100 only to lose your daily profits. Do you see where I'm going with this? When is enough enough? What if you only go for 1 pip a day? Will that cover your loses on your losing days? How much will you allow your self to lose in a day, a week, a month? Will you did yourself deeper, or will you walk away and "cool off"? How do you know if you're being disciplined as a trader unless you have goals that are specific, obtainable, and written down in front of you?

Anyway, happy trading :-)
Visit my journal here.
  • #28
  • May 31, 2008 5:57pm May 31, 2008 5:57pm
i'd like to follow up rosscub's comments with my own thoughts:

because it is impossible to know what your future profits will be, perhaps your trade plan should identify what your maximum loss for the year will be.

in other words, our profit/loss at the end of the year is tied to luck, so identifying maximum forex down-side is critical in managing your portfolio.

Quoting Rosscub
FXRichard,

There are certain keys to reaching your goals. One of them is that they should be specific; otherwise, how will you really know if you have obtained them. "To be profitable" is a worthy goal, but it's not specific enough. You should right down your goals and make them specific as possible. Know what you are working toward and how you are going to work to get there.

Also, make sure your goals are obtainable. If you are a scalper, 100 pips a day is going to be a tough row to hoe, so why consider it? You may be up 20 pips, but out of greed you shoot for 100 only to lose your daily profits. Do you see where I'm going with this? When is enough enough? What if you only go for 1 pip a day? Will that cover your loses on your losing days? How much will you allow your self to lose in a day, a week, a month? Will you did yourself deeper, or will you walk away and "cool off"? How do you know if you're being disciplined as a trader unless you have goals that are specific, obtainable, and written down in front of you?

Anyway, happy trading :-)
  • #29
  • May 31, 2008 6:31pm May 31, 2008 6:31pm
I guess I should have gone further into detail. I actually have a business plan that I have written that covers every detail of the way I trade, I do update/modifiy it as needed. At first you say I shouldn't have a goal for x pips a day but then my goal to be profitable is not specific enough...My goal is quite simple, I trade for max 2 hours, I take what the market gives me, if I feel happy with what I have received in 30 minutes I quit. If I have not made a profit then I have strict guidelines to quit for the day that I follow plain and simple, those guidelines depend on what has happened for the day so I do not say oh I lost x pips I'm done. I don't struggle for 5 pips, or 50 pips, I take what I am given based on the trades made, having a target of x pips can cause overtrading,frustration, and losses.
  • #30
  • May 31, 2008 6:43pm May 31, 2008 6:43pm
Hi...

Well I dont think there was a reply to my previous questions so I put this question.....have you only been trading this method for a month. and is that not a bit early to setting business plans and such for it...
  • #31
  • May 31, 2008 7:34pm May 31, 2008 7:34pm
The six pip a day argument doesnt hold because we are not all the same risk tolerent and if you have a bad day.. .30 pips or so with size... Are you going to put your method out there again to get back your 36?
Because there are no "guarantees" ...very few get there. The frog in the boiling water is a methodology .."i will build it up" .. .but truly, bad days and risk are a reality.
  • #32
  • Jun 1, 2008 6:16am Jun 1, 2008 6:16am
Quoting Angler
Hi...

Well I dont think there was a reply to my previous questions so I put this question.....have you only been trading this method for a month. and is that not a bit early to setting business plans and such for it...
That is correct however I have been trading/scalping for about a year only recently have I added LT's cyrox rainbow method to what I do, it is not the only way I trade right now but it may become that way. You wouldn't go into business without a plan would you? You would research and learn everything you need to know about the business, then write a business plan, and then open shop (of course with a lot of other nuances in between that don't pertain)
  • #33
  • Jun 1, 2008 6:19am Jun 1, 2008 6:19am
Quoting 4XWeezal
The six pip a day argument doesnt hold because we are not all the same risk tolerent and if you have a bad day.. .30 pips or so with size... Are you going to put your method out there again to get back your 36?
Because there are no "guarantees" ...very few get there. The frog in the boiling water is a methodology .."i will build it up" .. .but truly, bad days and risk are a reality.
I agree, to each their own, I know personally I would never get to the point of being down 30 pips a day, I would have quit long ago
  • #34
  • Jun 1, 2008 8:11am Jun 1, 2008 8:11am
FXRichard,

I never said you shouldn't have a goal of x pips a day. Try to understand what I'm saying. I said you shouldn't "expect" x pips a day. Having a daily goal helps you protect your profits and improve your psychological outlook on trading. If you set a goal for 10 pips and you reach that goal, then you quit for the day, and you feel good about yourself. Some days you won't make 10 pips, but that's no big deal; you just move on to the next day. The problem with some traders is that they are only looking to be "profitable" and through greed they over trade and lose the profits they have gained, which also makes them feel bad about themselves and about trading. It's easy to make pips, but unfortunately, it is even easier to lose them.

You said you have a detailed trading plan, but you haven't clearly defined your risk. You have to have a limit to how much you will lose in each trade, each day, each week, etc. Also, I suggest you define how many trades you will take in a session, a day, a week, etc. This will further protect you from overtrading. For example, I have a goal of 5 pips for the day, and I have two trades to make that happen. I only trade one session, and I quit for the day when I've (a) made my goal (b) lost a maximum of 5 pips or (c) made two trades.

If you find you are reaching your goal with ease, you can always adjust it up, or if you are struggling you can adjust it down to make it more obtainable. This is not about demanding the market giving you anything; you can't control the market, but you can control yourself.

None of this is meant to be a criticism of anyone's trading; I'm only trying to share what has worked for me and many other more experienced traders.
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  • #35
  • Edited 8:41am Jun 1, 2008 8:30am | Edited 8:41am
I am not a scalper, but have no issues w/the method - just not my style. One question - How does one handle the MM aspect when scalping? As you are aware MM won't help if you don't have a positive expectancy so I assume your method shows that.
Do u trade a % of acct per trade - or fixed lot size? At what point do you increase your position size?

And a Trade methodology, not MM question. That odd time when u happen to catch a move that goes and doesn't look back. Do you pyramid or take the profit as soon as it's over?
Thanks.
In trading, there is no bullshit. You either make money or you don't.
  • #36
  • Jun 1, 2008 9:21am Jun 1, 2008 9:21am
Quoting mrgreen
I am not a scalper, but have no issues w/the method - just not my style. One question - How does one handle the MM aspect when scalping? As you are aware MM won't help if you don't have a positive expectancy so I assume your method shows that.
Do u trade a % of acct per trade - or fixed lot size? At what point do you increase your position size?

And a Trade methodology, not MM question. That odd time when u happen to catch a move that goes and doesn't look back. Do you pyramid or take the profit as soon as it's over?
Thanks.
I can only answer these questions as they pertain to me; I can't speak for all scalpers.

I put a fixed percentage of my account into each trade, and I use a fixed stop/limit x pips away from entry. This comes out to a 1.5% risk/reward on each trade. Because I use a fixed percentage of my total margin, the size of my trade goes up as I win and goes down as I lose.

Now, when you make the decision to trade as a sclaper, you must also decide to adopt a scalper's mindset. This means you are only trying to scalp out a small profit from each trade. You can't care if price moves 100 pips beyond the small 5 that you have scalped out. You resign yourself to taking small, consistent gains day after day. Trend traders may be able to catch large swings that are hundreds or thousands of pips, but they also usually have larger drawdowns and suffer losing weeks or even months. A good scalper can go months without a losing week, but they have to be content with doing the small things right, time after time.
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  • #37
  • Jun 1, 2008 11:35am Jun 1, 2008 11:35am
Thanks Rosscub for the reply - what u say about the 'mindset' - yes I agree. The same exists for swing and trend trading. Numerous small losses and BE trades can get frustrating if the mindset and confidence in your method is not there.
In trading, there is no bullshit. You either make money or you don't.
  • #38
  • Jun 1, 2008 1:09pm Jun 1, 2008 1:09pm
Quoting mrgreen
Thanks Rosscub for the reply - what u say about the 'mindset' - yes I agree. The same exists for swing and trend trading. Numerous small losses and BE trades can get frustrating if the mindset and confidence in your method is not there.
Yes, that is correct. You must have the proper frame of mind for the style of trading you employ. Trend traders have to "let their profits run" and "cut their losses short", while scalpers have "to never let a winner become a loser."

A potential trader needs to recognize these differences and choose a style that is best suited for their personality. If numerous small loses are discouraging, a trader may want to attempt scalping, but if rapid entry and exits are too stressful, a trader may want to try swing trading. Some traders can effectively do both, while others will be better equiped for only one or the other. Remember the words carved into the Temple of Apollo, "Know thyself."
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  • #39
  • Jun 1, 2008 1:11pm Jun 1, 2008 1:11pm
6 pips a day is plenty....

providing it's an average

to get it you need 200+ days now and again and reasonable stops like 100 or thereabounts.

its not a daily target, it's an average to aim for tho.
https://linktr.ee/Soultrader
  • #40
  • Oct 27, 2009 4:32am Oct 27, 2009 4:32am
Quoting Rosscub
I average a measley 1 pip a day, but that returns on average about 5% a month. This month I had 26 trades with 73% positive. Average gain was 2 pips; average loss was 2 pips. I never had greater than 1.5% peak to valley drawdown.

My point is that small gains can produce a reasonable, consistant return.

Trading is a business.
Trading is a business yet this above is the apitamy of gambling...

My point is that small losses can produce reasonable, consistant failure.
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