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5 pips a day

  • #1
  • First Post: Jul 10, 2008 5:08am Jul 10, 2008 5:08am
Hello all!

You might or might not know the .pdf "Rules for Forex Trading" by lever70.

In that, she describes how small daily gains compound into big monthly gains over time, that allow you to live from trading.

In an example, she assumes a trader with $2000 starting capital is trading $5 lots. 5 pips for this trader means $25 per day, which in turn means $500 per month (20 days).

This means this trader has 25% profit per month.

5 pips a day seems small, but 25% per month seems a lot compared to what professional money managers are able to do.

My question to Traders with enough experience to give a meaningful answer:

Is a goal of making 5 pips per day realistic?
  • #2
  • Jul 10, 2008 5:15am Jul 10, 2008 5:15am
Now, that I posted it, I saw that there have been similar threads.

Sorry for that if you are annoyed by these kind of questions. To clarify: I am aware that there will be losing days, so it is about 5 pips on average.

Still, I am interested in hearing comments backed by experience.
  • #3
  • Jul 10, 2008 5:23am Jul 10, 2008 5:23am
everything is possible
  • #4
  • Jul 10, 2008 5:35am Jul 10, 2008 5:35am
the problem in trying to make 5 pips a day is that you have to risk at least 20 pips so if you have one losing trade a week you not making any money .
  • #5
  • Jul 10, 2008 6:42am Jul 10, 2008 6:42am
Quoting gico
the problem in trying to make 5 pips a day is that you have to risk at least 20 pips so if you have one losing trade a week you not making any money .
So your message is: If you want to have gains you are going to have the same amount in losses, so trading profitably is not possible?

Let me quote myself and stress the words meaingful answer here.
  • #6
  • Jul 10, 2008 8:24am Jul 10, 2008 8:24am
open E/U...open 15TF...30mins before london market open take hi and lo of 15 candle.....
  • #7
  • Jul 10, 2008 8:27am Jul 10, 2008 8:27am
Quoting BStar
So your message is: If you want to have gains you are going to have the same amount in losses, so trading profitably is not possible?

Let me quote myself and stress the words meaingful answer here.
You have to ask yourself if you are looking for a meaningful answer or for someone to merely validate your opinion.

Gico is right.
Not all sins are created equal
  • #8
  • Jul 10, 2008 8:34am Jul 10, 2008 8:34am
That compounding model assumes that you never have a losing trade.

Because, with a losing trade, you then reduce your balance, and from that need to take in more pips or have larger lots to make the money back. Example:

Let's say I have $100. I lose 10% of that 100, so I have $90 left. By what percentage do I need to increase that $90 to get back to $100?

If you answered 10%, you're wrong. You need to make about 11% back.

If I instead lose 50% of that $100, so I have $50 left. By what percentage to I need to increase that $50 to get back to $100?

The answer: 100%.



Those compounding models are best saved for your guaranteed-interest bank account. Not for forex trading.
  • #9
  • Jul 10, 2008 8:39am Jul 10, 2008 8:39am
I once knew a very sincere & dilligent trader who had a very similar mantra: 4 pips per day. In fact, he used a spreadsheet to calculate that as long as he could achieve 4 pips a day, as his balance grew, he could turn $200 into a million in just a few years.

Guess what he's doing today.

Not trading.

Why? Because after a string of wins, he would suffer a huge loss due to not having set a SL, hoping beyond hope that the market would turn around and give him is "guaranteed" 4 pips/day. After trying over and over again, he finally lost every penny, and today, he won't even look at a chart.

The scalper's mantra is "A million dollars in a million trades." Some scalpers I know are actually very successful, but only because they know where to place the greatest probability entries. And, if they they're shooting for 4 pips, they'll put a religious SL at 2-3 pips, always smaller than their profit goal. Otherwise, you can win 99% of your trades and still lose money at the end of the day.
Dave
  • #10
  • Jul 10, 2008 8:41am Jul 10, 2008 8:41am
$5 lots on a $2000 account. no way, sooner or later you will bust. stop reading all that bulls**t about you can make i don't know how many $ if you do this and that. the possibilities are endless.

know money management. that is the key.
Twitter: @forexpokerpro
  • #11
  • Jul 10, 2008 8:57am Jul 10, 2008 8:57am
Quoting BBPI_fxtrader
$5 lots on a $2000 account. no way, sooner or later you will bust. stop reading all that bulls**t about you can make i don't know how many $ if you do this and that. the possibilities are endless.

know money management. that is the key.
My thoughts exactly. I risk 28 cents per pip on a $2800.00 account. It allows me (a newer trader) to ride out some mistakes without busting my initial capital. I started with $500 back on March 6th and am now at $2800. My total profit is $1042.00. I risk 1% on each trade and I remember when I started I made around $9 profit my first week. Thanks to componding and discipline to learn the basics, of that $1042 profit $171.00 of it was made the first three days of this week. Its taken me over 8000 pips to get to this point, but I am in this for the long term and will slowly bump up my risk as I get to be a better trader. I can not ever see myself risking more that 4% on any trade. If you risk $5 per pip on a $2000 account that gives you a maximum drawdown of 16 pips and you have lost 4% of your account. My goal is a $100,000 account. I will decide then If I can still make a go at this business full time.
  • #12
  • Edited 1:07pm Jul 10, 2008 12:57pm | Edited 1:07pm
Answer is YES... and my goal is 25 pips a day and I do it. A good system and proper money management is the answer.

I am not sure where traders assume that there are 20 trading days a month. If you pull out a calendar for any month, you will not find a single month where the trading days are 20 or less.

1/2 standard lot (0.50), is ridiculous for a small balance of $2,000. One should trade no more than 1/5 standard lot (0.20) on a $2,000 balance at the most. Trading higher is an invitation for a disaster to happen.

Quoting BStar
Hello all!

You might or might not know the .pdf "Rules for Forex Trading" by lever70.

In that, she describes how small daily gains compound into big monthly gains over time, that allow you to live from trading.

In an example, she assumes a trader with $2000 starting capital is trading $5 lots. 5 pips for this trader means $25 per day, which in turn means $500 per month (20 days).

This means this trader has 25% profit per month.

5 pips a day seems small, but 25% per month seems a lot compared to what professional money managers are able to do.

My question to Traders with enough experience to give a meaningful answer:

Is a goal of making 5 pips per day realistic?
"To Be A Successful Forex Trader, You Need A Successful Forex Mentor."
  • #13
  • Jul 10, 2008 1:04pm Jul 10, 2008 1:04pm
I am amazed.

I am truly amazed. And bored out of my mind by answers to questions I didn't ask.

Do you think it is possible to make 5 pips per day on average?

NOT a question about money management (yes, I know it's important, but this is not about money management)
NOT a question about the possibility of never having a losing trade (I already know that losing trades are inevitable)

Don't assume things that aren't there please.

If you trade at all, you do it, because you think you have an edge and can use it to make money. If you make money, you must be able - over time - to calculate how many pips you make on average per day.

It's really quite an easy question, I don't understand all the fuss.

Just to make sure, that you get the question right:

Do you think it is possible to make 5 pips per day on average?
  • #14
  • Jul 10, 2008 1:05pm Jul 10, 2008 1:05pm
Quoting CTGUY
Answer is YES... and my goal is 25 pips a day and I do it. A good system and proper money management is the answer.
Wow, somebody understood the question.

Thanks and congratulations!

For how long have you been able to do it on a live account?
  • #15
  • Jul 10, 2008 1:10pm Jul 10, 2008 1:10pm
Quoting BStar
Wow, somebody understood the question.

Thanks and congratulations!

For how long have you been able to do it on a live account?
Hey there... I have been trading for over 10 years. I have many friends that have continued success making at least 20+ pips every day my friend.
"To Be A Successful Forex Trader, You Need A Successful Forex Mentor."
  • #16
  • Jul 10, 2008 1:13pm Jul 10, 2008 1:13pm
Quoting KissFan
My thoughts exactly. I risk 28 cents per pip on a $2800.00 account. It allows me (a newer trader) to ride out some mistakes without busting my initial capital. I started with $500 back on March 6th and am now at $2800. My total profit is $1042.00. I risk 1% on each trade and I remember when I started I made around $9 profit my first week. Thanks to componding and discipline to learn the basics, of that $1042 profit $171.00 of it was made the first three days of this week. Its taken me over 8000 pips to get to this point, but I am in this for the long term and will slowly bump up my risk as I get to be a better trader. I can not ever see myself risking more that 4% on any trade. If you risk $5 per pip on a $2000 account that gives you a maximum drawdown of 16 pips and you have lost 4% of your account. My goal is a $100,000 account. I will decide then If I can still make a go at this business full time.

Hey Kiss Fan

So you don't trade a standard lot size - $10 a pip - until you have $100,000 account????

Wow

Unless you are using 200+ pip SL this is just blowing my mind I wouldn't call that solid MM or great dicipline but just scared money! No offence!

BUt I agree $5 a pip with a $2000 account is way too much - Me personally would be $2 a pip for a 2K account, This gives 1000 pip drawdown which f you are confident in your trading abilities is more than enough IMO.

Im just thinking if you had 100 K and are only trading $10 a pip then sure any loss is is a drop in the ocean and emotionally disconcerning (is this really a good thing?) But you prob have $90,000 of that 100 sitting there not working for you and pretty much gathering cobwebs

anyone agree?
Time hides Nothing
  • #17
  • Jul 10, 2008 1:25pm Jul 10, 2008 1:25pm
Quoting CTGUY
1/2 standard lot (0.50), is ridiculous for a small balance of $2,000. One should trade no more than 1/5 standard lot (0.20) on a $2,000 balance at the most. Trading higher is an invitation for a disaster to happen.
Yeah, well... I didn't really open this thread to discuss the money management or risk/reward in lever70's example, but just to clarify: Trading $5 lots with $2000 translates to a maximum of 5% loss per trade (which is a lot, I know) with her method (catastrophic hard-stop at 20 pips loss). But that is only the catastrophic scenario, when something unexpected happens to which you can't react quickly enough. You would actually get out much sooner (6-10 pips down), which would translate to about a 2% risk per trade.

Let's please not discuss if these kinds of stops make sense, because that would be a discussion of her method, which I don't want to do here.

Which lot size you can use obviously depends on the size of your SLs. A scalper can use a higher lot size than a position trader. So we can't discuss reasonable lot sizes without discussing the methods we have in mind, but that is not what this thread is for.
  • #18
  • Jul 10, 2008 1:28pm Jul 10, 2008 1:28pm
not everything is realistic

don't get your hopes up with smily faces and thumbs ups....


let's say you lose 20 days in a row and are at a 50% drawdown.... now you need to make 100% to get back to break even. think about that.

Quoting teodosy87
everything is possible
  • #19
  • Jul 10, 2008 1:30pm Jul 10, 2008 1:30pm
that's a great claim but i haven't seen any evidence.

Quoting CTGUY
Hey there... I have been trading for over 10 years. I have many friends that have continued success making at least 20+ pips every day my friend.
  • #20
  • Jul 10, 2008 1:35pm Jul 10, 2008 1:35pm
Quoting tdion
that's a great claim but i haven't seen any evidence.
CTGUY maintains a journal here on FF, so far the trades look legit. I'm not 100% sure yet, but following the trade times and comparing them against my own sets of charts shows that at least he is more among those 5% of highly profitable traders.

I don't quite believe absolutely everything that I read there, but I have very few reasons to disprove what was posted.
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