Aiming for pips or %

So in your trading are you aiming for daily, weekly, monthly (etc) pips or a % return on capital ?

What is the theory ?

I read alot of the more experience people say % return, however if you are trading for a living i would assume you need to aim for pips in order to achieve a salary ?

I understand if you are learning to trade or building a trading account, % return is key..

So which is it for you and what is your reasoning ?

There is no doubt, when i look at aiming at a number of pips, the pressure is greater and losses occur due to entering trades you might not otherwise.
Likewise, if i'm aiming for a %, i don't find myself entering 50/50 trades ..

thx

Percentages. Pips don't tell you the whole picture because if you calculate pips, your actual performance is not known until each of your position sizes is known.

If you use a solid position sizing method like fixed fractional then your position size is based on your initial stop size - therefore pips on a position where initial SL is tighter mean much bigger profits than a position with a loose sl.

Just an example: Same +pip count would mean 1*5x more profit if a stop is 1/3 tighter than on other position.

#1 profit on every trade...

always I've based it on percent... always I wanted 10% per week. So 2% per day.... so 2-0 would get me 2% BUT with losers you can't sustain that...


I risk ~5% per trade but look for a 90+ percent win ratio.

Pips don't mean shit.
If I place a trade aim for 3000 Pips and set my Stop at 3000 Pips with
0.5% risk. I just made 3000 Pips in a month.
All noobs will go crazy. ZOMFG 3000 PIPS THAT GUY MUST BE RICH...
That's way you will see scammers allways advertise with Pips/Month because
most retail traders don't know that it's absolutely meaningless.

Well said, and you also showed that the market will dictate when you will collect your profits. Too many people try to make "x" number of pips or "y" percentage per day, week, month etc. The market will give profits on its terms and not yours.

pipmyride,

There isn't necessarily a right or a wrong way to look at this. However, if you want to trade for a living, I'd suggest you need a method you can consistently execute in a successful way - this takes most of us much longer than we would like to admit. Once you have at least one of those, you know what you are capable of in pips per month; you should also know your "breakeven point", ie.the minimum $$$ you need to adequately survive.

So say you're young and can get by on $2k / month and your method yields 10 pips / day on average, then all you need is an account big enough to trade 1 full size lot.

Sounds easy, doesn't it : just read all the threads with people making huge amounts of pips. But I'll bet very, very few are consistently averaging just 10 pips a day and far less than that are doing so with a meaningful position size.

So what I'm saying is it's not about pips or %, it's about the stuff you actually pay for your lifestyle with : money.

Warning: I have a little different trading style than most on this forum. I use BB, EMAs, Slow Stochastics and RSI. I trade real money. I trade full size lots (from 2-20 but typically 5). I only set a stop loss to protect against a power outage. I trade manually with no EA. I feel confident trading 2 lots on a $2500 account. I trade for small pip moves. I trade short time frames (a trade held over an hour and a half is a long one).

All of this works very well for me, but may not for others. Having said that, here is my two pips worth....

I think that everyone needs to find what works for them; something they can get their mind around. For me, it is pips/trade. I have always felt that several small bites will make you just a full as one huge one. So I have concentrated on making consistent pip sizes (10 pips), and naturally letting it run longer if it is profitable. Same way with OEX options; look for a small move ($0.10) instead of a huge one. That way, at least in my mind, if I know I can get these small moves pretty easily and often, then all I need to do is increase the number of lots or contracts.

So in that respect, a 10 pip move, while seeming pretty small trading micro-lots, is a good profit when you work up to 5 lots (roughly $500). Do that a couple of times a day and you are suddenly making decent money but haven't done anything differently with your trade identification.

But that is what separates the wheat from the chaff: if you can not accurately predict the direction of the stock, you won't make money in options. If you can't accurately predict the direction of the currency move, you won't make money in forex. Keep in mind this direction is only relative to your goal, so where I predict the direction on a smaller (10 pip) scale, others may predict using a daily chart. But irregardless, once you get good at predicting that direction, then you make your profits viable by the number of lots/contracts traded.

Again, this is what works for me and may not for others.

finally someone that understands

There is nothing to understand. If you don't define maximum risk before you get into trade, your maximum risk is amount when you get a margin call. If you do have a stoploss, you are trading with risk percentage amount of your account and that risk can easily be calculated - you just haven't calculated the risk and therefore don't know it.

IMHO it's better to know the risk per trade than trade blind from the gut but that's just me. Especially because that way you can make simulations to calculate the optimal risk - it's easy even though if you trade manually, just take an excel of your past trades and run them through different money management algos to see how different kind of risk percentage would make your profits/drawdowns look like compared to fixed lot.

I'm enjoying the movie, thanks, mikkom. Absolutely fabulous photography - mustn't let the blue-green algae distract me from rolling some futures contracts in the next few mins...

i think we should look for %

I think you've answered your own question. This is what all of us where trying to tell you when you posted teh question about trading for a living. You MUST have enough cash reserves to sustain your living for x-period of time. However time you think you will need to hone your skills... CAUTION...many of us have taken 4-5 years.

Then you can trade and allow the market to provide what its going to provide. ONLY then (free of stress) will you be able to recognize and profit from the market. If you're constantly worrying about "I'm 400 pips away from my goal" or "only 25 pips more then I'll have my goal"...You will either take profit too soon, or worse, lose what profit you had while waiting for the last 25 pips...DONT DO IT.

Learn to watch the market and recognize its patterns. Always have a plan to take profit when the market makes it available to you. Try not to lock youself into a daily...weekly...monthly goal.

That being said, I too have a "goal" of 200 pip each week. But I only use that goal as a measuring rod to tell me if I'm trading up to MY standard that I set for myself. Why 200 pips? (1) Its reasonably attainable, (2) Its not greedy (3) It can produce a sustainable income given the right position size.

Again I only use it to check if my trading is on par. If I go several weeks short of my goal, I reveiw my trading journal and check my trading for errors...then I try to figure out WHY I made those errors...was it the market? Was it my emotion? Was it the neighbor's dog crapping on the lawn AGAIN?

Likewise if I have several weeks above my goal, I check to see if there was something I can take away from that to improve my trading from here on.

Using a trading goal should be to assist your trading...not produce more stress...there is enough of that already in our daily lives. Again If you are doing this for a living, then start out by having enough reserve to sustain you modestly for at least a year. Dont add to the pressure or you might as well keep your IT job and your sanity.

Good post. Don't forget the other side of the equation though, a 10 pip move with 5 lots, a couple of times day, as losers, means $1000 lost. On a 2500 account, you won't last long, even on a 10K account.

I'm aiming pips and then calculate the percentage

Your aim should be to trade properly every day. Market circumstances dictate how many pips you can make.

as others have said, i think that you should always have a specified risk percentage when entering the trade. but, as for what you aim for, i dont think you should aim for anything. just make a trade. when you win or lose a trade, forget about it. you start with a fresh slate for each trade. if you have had 3 good trades for the day and 1 bad one, dont think that you are up 2 trades. dont even think about past trades AT ALL unless you are looking at a history report and analyzing past trades or mistakes. but when you are actually trading, forget about it. and dont aim for a certain percent or pip number. if you do, when you reach that goal, you'll stop trading and possibly miss out on potential trades and eventually get overconfident in your abilitis if it continues. if you dont reach that goal, you might overtrade to try and get to it and end up losing.

just focus on your current trade. put in your risk, and then forget the numbers. watch the market and time your entry and exit. then move on to the next trade, forgetting entirely about the last one. it doesn't matter if you earn 10 pips or 50, half a percent or three. just focus on managing the trade and getting out when you see the market turning around.

You should always initially target Pips as it is the easiest way to measure your targets. HOWEVER one of the biggest parts of trading is figuring out the lot sizing which you should always base on risk and %.

Each trading situation will be different, and each trader will trade differently. But in order to make a successful trade you need to take three steps:
1 identify an opportunity
2 determine your exit and entry points
3 Calculate proper risk and money management

step 1 is not pertinent to this discussion, however step 2 and 3 are. Step 2 has you measure the pip value for your stops and profit targets. After you have calculated your pip risk to reward ratio, you can properly adjust you Lot size based on your risk tolerance and capital which is step 3.

Lot size can be increased yourself, but pips can't be increase yourself at will.

So when developing strategy go for pips aiming, then only plan out the money management.

well i trade off of % i aim for 250 pip's a week but i adjust my trading lot size to compensate for account growth.