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:: Pips are not what counts ::

  • #1
  • First Post: Apr 22, 2007 5:22pm Apr 22, 2007 5:22pm
I work to be able to spot entry setups and end of moves before the crowd does. I avoid chasing the market so I don’t enter a trade too late and get burnt. I try to read the market better every day. I exit successful trades before my profit evaporates - some times. I've learnt when to let my profits run - I could be better.

I do all of the above and a 1001 other things to make a profit. If I make pips I have a profit. If I lose pips and have a net loss I have lost money at the end of the month.

How each and every one of us gets those pips - if we ever do - matters. But not as much as the bottom line. Profit. And here that means positive pips.

I started this thread because of a post I made here which was disputed. BTW you may have missed it because it's in the lounge. The differing opinion is below.

Quoting mbqb11
Pips are not what counts, expectancy is. In sum pips are not a measure of success without much more information. A trader who makes 1000 pips a year is not a better trader, or should be equated to a higher status then someone who makes 500 pips a year.
So, my contention is, if someone makes 1000 pips a year then he is clearly a better trader than someone who makes 500 pips. I am not interested in lot size or volume here. I'm interested in pips. It's the person that made the right choice trading at the same lot size and volume as another. Exiting at different fractional lots if you wish by splitting - not a problem. I usually do that.

Pips are what counts. It's your profit.
Do not focus on making money; focus on protecting what you have.
  • #2
  • Apr 22, 2007 5:31pm Apr 22, 2007 5:31pm
Hi

I use pips as one measure of my progress as well as increase in account balance. I think what Mike may be getting at is that pips only matter if you are trading much the same lot size all the time as I do at present.

For instance, if you put on bigger lots on some trades and those are the ones you tend to lose on, it's easy to see how you could be pips positive without showing an increase in your account balance.

I'm so far just over 1200 pips up in my first live account started in November (6 months) but wouldn't dare consider myself a good enough trader to advise others yet.

Kind Regards
Steve

Quoting Why Oh Why
I work to be able to spot entry setups and end of moves before the crowd does. I avoid chasing the market so I don’t enter a trade too late and get burnt. I try to read the market better every day. I exit successful trades before my profit evaporates - some times. I've learnt when to let my profits run - I could be better.

I do all of the above and a 1001 other things to make a profit. If I make pips I have a profit. If I lose pips and have a net loss I have lost money at the end of the month.

How each and every one of us gets those pips - if we ever do - matters. But not as much as the bottom line. Profit. And here that means positive pips.

I started this thread because of a post I made here which was disputed. BTW you may have missed it because it's in the lounge. The differing opinion is below.



So, my contention is, if someone makes 1000 pips a year then he is clearly a better trader than someone who makes 500 pips. I am not interested in lot size or volume here. I'm interested in pips. It's the person that made the right choice trading at the same lot size and volume as another. Exiting at different fractional lots if you wish by splitting - not a problem. I usually do that.

Pips are what counts. It's your profit.
  • #3
  • Apr 22, 2007 5:45pm Apr 22, 2007 5:45pm
Quoting steviet
For instance, if you put on bigger lots on some trades and those are the ones you tend to lose on, it's easy to see how you could be pips positive without showing an increase in your account balance.

I'm so far just over 1200 pips up in my first live account started in November (6 months) but wouldn't dare consider myself a good enough trader to advise others yet.
Steve, thanks for the post. 10 lots, 5 exited for 10 pips. 5 exited for a loss of 20 pips. Net loss is 50 pips. On that trade. IMO. Treat it as 1 trade. If you exit at different times, not a problem when calculating that way. On the other point your experience is appropriate when considering the 2 tier system. On this thread I'm just trying to get a handle on the consesus if pips matter.
Do not focus on making money; focus on protecting what you have.
  • #4
  • Apr 22, 2007 5:56pm Apr 22, 2007 5:56pm
I think Pips are one way to measure how one is doing.
But the only way you can say trader A is better than trader B purely based on pips is if they are using the same trading system.

The other thing is you can't not include lots/trading volume in the equation.
Certain traders aim for smaller amount of pips because they're trading 10 times the money than others.

"Pips are what counts. It's your profit."

The problem with this is that Pips are not the same as your profit.
Trader A can be making 200 pips a week using 1 std lot. (ie $2000)
Trader B can be making 50 pips a week using 10 std lots. (ie $5000)

In the above example the pips don't tell the whole story.

I guess it's a matter of opinion.

Tom
  • #5
  • Apr 22, 2007 5:56pm Apr 22, 2007 5:56pm
This is a quote from an email I had with Darkstar long ago when he was helping me analyze a system I had been working on. Pending he doesn't mind this here, I will leave it up. If he tells me he would rather me not quote him I will remove this.

He says


"That expectancy number is what you can expect your system will return for every dollar you put at risk over time. It really is powerful because it allows you to compare systems with very different attributes. If you caught the recent post on FF about the how the number of pips a system makes is irrelevant, this is what we were discussing. A system that generates 50 pips a month with a 0.95 expectancy is dramatically lower risk than one that makes 1000 pips a month but only has an expectance of 0.05. Would you rather make $0.95 for every dollar you put at risk or $0.05?"


Van Tharp does a tremendous job discussing this topic in his book(Trade your way to financial Freedom), as other things come into play such as frequency of trades.




Hope this is clearing things up a bit.



Mike
(i
edit* again this is my point when trying to get the story with pips(as you had said in the other thread, someone who makes 1000 pips is a trader and someone with 500 at year end is a junior trader). If you say you make 1000 pips a year, and I say I make 500 pips a year. NO ONE can make a proper assumption on what that means in regards to trading and ones success. Too much missing information.
  • #6
  • Apr 22, 2007 6:04pm Apr 22, 2007 6:04pm
Everybody is posting pips on these forums.
In order to make it clear when posting pips multiply them by the number of lots.
this way if you made 10pips on 2 lots post 20pips,
if you made 10 pips oh 0.5 lot post 5 pips.

Otherwise, of course pips make no sense.

In long term strategy one might aim for 100 pips on 1 lot.
in short term strategy one may get away with 10pips on 10 lots.

Even then not all pips are equal. EURUSD pip is $10 and USDJPY pip is $8.50 for example.
  • #7
  • Apr 22, 2007 6:05pm Apr 22, 2007 6:05pm
Quoting Why Oh Why
Steve, thanks for the post. 10 lots, 5 exited for 10 pips. 5 exited for a loss of 20 pips. Net loss is 50 pips. On that trade. IMO. Treat it as 1 trade. If you exit at different times, not a problem when calculating that way. On the other point your experience is appropriate when considering the 2 tier system. On this thread I'm just trying to get a handle on the consesus if pips matter.
Yes I agree w/ this if your scaling in or out of trade it the avg that should be counted.
  • #8
  • Edited 7:42pm Apr 22, 2007 6:15pm | Edited 7:42pm
Quoting irusoh
Everybody is posting pips on these forums.
In order to make it clear when posting pips multiply them by the number of lots.
LOL then I would have like 20k pips..

The bottom lines is it all comes down to personal preference. And for those people that are concerned how much pips equal to $ & cents for others is probably the reason why they aren't successful in trading, their worrying to much about things that aren't going to make them successful or help them in any way shape or form.
  • #9
  • Apr 22, 2007 6:38pm Apr 22, 2007 6:38pm
I happen to agree with you. saying otherwise would be like saying a person with more money is and always will be better than you.
Hypothetical: I trade one mini-lot a trade, my account is $100. I do 8,000 pips a year.
Someone else makes 2 trades a year. One is a carry trade. The other is a correction on the kiwi/dollar. (S)he make 160pips on 5 lots. So not including interest on the carry trade, 160 x $50(5 lots, 10USD per lot) = $8,000.

Who was the better trader? Who was more impressive? I'd admit, it must be nice to filter your trades so you can only find the best ones, and once in a while have a nice little swing trade. But is someone going to say that the person who made 8,000 pips didn't do that well? If he traded multiple full lots he'd be rich.

What you'd need is a weighted average formula considering lots of things to see who works the best. Because if you only judged talent by end of year Tax Returns on profit, it's not going to work.
I made a margin newbie mistake, I admit(4x is werid verus other markets in that system), but I like to think I'm not doing that horrible. No matter how many trades I hesitate on and miss.
  • #10
  • Apr 22, 2007 6:42pm Apr 22, 2007 6:42pm
Quoting Why Oh Why
I work to be able to spot entry setups and end of moves before the crowd does. I avoid chasing the market so I don’t enter a trade too late and get burnt. I try to read the market better every day. I exit successful trades before my profit evaporates - some times. I've learnt when to let my profits run - I could be better.

I do all of the above and a 1001 other things to make a profit. If I make pips I have a profit. If I lose pips and have a net loss I have lost money at the end of the month.

How each and every one of us gets those pips - if we ever do - matters. But not as much as the bottom line. Profit. And here that means positive pips.

I started this thread because of a post I made here which was disputed. BTW you may have missed it because it's in the lounge. The differing opinion is below.



So, my contention is, if someone makes 1000 pips a year then he is clearly a better trader than someone who makes 500 pips. I am not interested in lot size or volume here. I'm interested in pips. It's the person that made the right choice trading at the same lot size and volume as another. Exiting at different fractional lots if you wish by splitting - not a problem. I usually do that.

Pips are what counts. It's your profit.
It depends on what your ultimate goal is; to accumulate pips or to accumulate money.

If its pips, then sure, pips are what count.

But if it's money, then pips don't always count.
  • #11
  • Apr 22, 2007 7:08pm Apr 22, 2007 7:08pm
For all of those that wish to measure their progress in pips... Find a Borker that allows you to Deposit Pips.
  • #12
  • Apr 22, 2007 7:34pm Apr 22, 2007 7:34pm
In my trading records, i don't have a column for pips anymore. Every calculation is based on the $ value (risk, net, expectancy, win ratio, P/L).

Because I pyramid, focusing on pips really deceives me. I could be up 200 pips, but if I'm only 50 bucks up and the next trade risks 70 bucks, it wouldn't make sense for me to add since that would eliminate my profits. But just looking at pips seems to give a skewed outlook that it's safe to add on your trades.

so no, pips are useless
  • #13
  • Apr 22, 2007 7:48pm Apr 22, 2007 7:48pm
Quoting techno79
Who was the better trader? Who was more impressive? I'd admit, it must be nice to filter your trades so you can only find the best ones, and once in a while have a nice little swing trade. But is someone going to say that the person who made 8,000 pips didn't do that well? If he traded multiple full lots he'd be rich.
How much time per week did person X spend to make 8,000 pips?

How much time per week did person Y spend to make 160 pips?


Which would you rather?
  • #14
  • Apr 22, 2007 9:03pm Apr 22, 2007 9:03pm
please, correct me if I am wrong.
I thought it was some kind of ethics code to post pips rather than dollars or euros or whatever... in other words it is not polite to post results in real money.

By the way when posting pips also post if they are demo pips or live pips...
  • #15
  • Apr 22, 2007 9:14pm Apr 22, 2007 9:14pm
It is possable to have negative pips and and a positive account!
  • #16
  • Apr 22, 2007 9:15pm Apr 22, 2007 9:15pm
%R...
  • #17
  • Apr 22, 2007 9:39pm Apr 22, 2007 9:39pm
Pips are not what counts, it is EQUITY that really counts in this game. We all know that EQUITY is what really matters. If our equity is up, we are up overall, if our equity is down, we are down overall.

If someone was running a Martingale system, then he could be DOWN in pips yet up on Profit and Equity. In the end, that is all that matters.

I personally don't run a Martingale system but if I did, I would probably use the EURGBP pair as it is the most rangy pair to trade and that is how martingale systems do the best on.
  • #18
  • Apr 22, 2007 10:05pm Apr 22, 2007 10:05pm
Quoting hilmy83
Because I pyramid, focusing on pips really deceives me. I could be up 200 pips, but if I'm only 50 bucks up and the next trade risks 70 bucks, it wouldn't make sense for me to add since that would eliminate my profits.
I'm not bothering to read the rest of this thread because my point can be made right here.

Pips mean nothing regarding profitability or competency as a trader because most traders have variable stop loss sizes. If your first trade has a 20 pip stop, you risk 1%, and you close it at +40 pips, you earned 2%. If the next trade has a 100 pip stop risking that same 1% and your stopped out, your down 60 pips but UP 1% in dollars.

So from a pip perspective your a net loser, but from a profitability standpoint your a winner.
  • #19
  • Apr 22, 2007 10:13pm Apr 22, 2007 10:13pm
Quoting Darkstar
I'm not bothering to read the rest of this thread because my point can be made right here.

Pips mean nothing regarding profitability or competency as a trader because most traders have variable stop loss sizes. If your first trade has a 20 pip stop, you risk 1%, and you close it at +40 pips, you earned 2%. If the next trade has a 100 pip stop risking that same 1% and your stopped out, your down 60 pips but UP 1% in dollars.

So from a pip perspective your a net loser, but from a profitability standpoint your a winner.
I have to agree. For my own record keeping, in order to make it mean something, I measure my wins and losses in "X times my risk." For example, if my stop is 10 pips wide, and I close at 20 pips up, my win is 2xrisk. Since I may vary my actual amount risked due to my perceived probablility of the trade, this way I can keep track of my wins and losses in an accurate and reproducible manner.

So, for me, pip totals mean nothing; it's only the relative return measured against what I've risked that I care about.
Indicators are to Price as Newspapers are to Bloomberg.
  • #20
  • Apr 22, 2007 11:49pm Apr 22, 2007 11:49pm
Quoting irusoh
please, correct me if I am wrong.
I thought it was some kind of ethics code to post pips rather than dollars or euros or whatever... in other words it is not polite to post results in real money.

By the way when posting pips also post if they are demo pips or live pips...
Lol no. We are here to make money and talking about money is always good , polite and healthy.

When people post pips, please state your lot size.
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