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:: Pips are not what counts ::

  • #101
  • Oct 30, 2009 8:20am Oct 30, 2009 8:20am
Quoting Dopey
The bottom line is that ANYONE can adjust their risk per trade to whatever amount they wish. They can do this from trade to trade if they wish. They can adjust how much they wish to risk per trader in pips as well. Neither of these require nor imply any trading skill at all.

Show me a trader who consistently makes 200 pips a month and another who makes 100 per month (hypothetical numbers). It doesn't matter what type of risk control or money management each is employing, the former trader is a better trader. He can always ramp up his risk to the...
Hey mate,

Gotta disagree with you here. Pips mean nothing to me, it is all about % of account gained or lost.

Say trader A makes 3 trades this week. 2 long term trades with 150 pip stop loss and 1 short term trade with 30 pip stoploss. Each trade is worth 1% of account balance. If both long term trades are stopped out for a total of 300 pips or 2%, but the short term trade is closed out at 90 pips profit or 3%, then the trader has made 1%, but lost 210 pips.

Now, say trader B makes 3 trades also. 2 long term trades again with 150 stop loss and 1 short term with 30 pip stop loss. Both the long term trades are closed for a profit of 50 pips each, or or 0.67%. The short term trade is stopped out for 30 pips, or 1%. The trader has lost 0.33% but made 70 pips.

Which trader has done better for the week in real terms?
  • #102
  • Oct 30, 2009 8:26am Oct 30, 2009 8:26am
Quote
Narrow Minded, Huh!
I like the attitude though. Atleast I know that when i'm in green pips for the month I've made money. Looking at your method you'd have no idea where your account stands. I don't know how you can stomach pulling green pips out the market and potentially making nothing from it, or even worse losing money.
IMHO if your stll reducing position sizes to account for larger stop loss requirements then you have a long way to go. Don't speculate, Read the market and be consistent in everything you do.

  • #103
  • Oct 30, 2009 8:32am Oct 30, 2009 8:32am
Quoting Dopey
The bottom line is that ANYONE can adjust their risk per trade to whatever amount they wish. They can do this from trade to trade if they wish. They can adjust how much they wish to risk per trader in pips as well. Neither of these require nor imply any trading skill at all.

Show me a trader who consistently makes 200 pips a month and another who makes 100 per month (hypothetical numbers). It doesn't matter what type of risk control or money management each is employing, the former trader is a better trader. He can always ramp up his risk to the...
Hypothetically show me then if Trader A trades daily candles and achieves 200 pips on say a 1:1 ratio and trader B is a skilled scalper than achieves 100 pips at a 10:1 ratio. Trader As risk is 200 pips which defines his lots size while trader Bs risk may be 10 pips which also defines his lots.

If both trade 2% then trader B is a mile infront based on the 10x reward. He would have made in a month 20% as opposed to 2% for trader A.

Show me how trader A who achieved more pips can ramp up his position to match the returns on trader B without employing rediculous risk management

Razor
  • #104
  • Oct 30, 2009 8:35am Oct 30, 2009 8:35am
Quoting Agro
Hey mate,

Gotta disagree with you here. Pips mean nothing to me, it is all about % of account gained or lost.

Say trader A makes 3 trades this week. 2 long term trades with 150 pip stop loss and 1 short term trade with 30 pip stoploss. Each trade is worth 1% of account balance. If both long term trades are stopped out for a total of 300 pips or 2%, but the short term trade is closed out at 90 pips profit or 3%, then the trader has made 1%, but lost 210 pips.

Now, say trader B makes 3 trades also. 2 long term trades again with 150 stop loss...
Finally someone speaking my language and the real truth of trading. % growth.
  • #105
  • Oct 30, 2009 9:27am Oct 30, 2009 9:27am
I'm not disagreeing that risk control or money management play a significant role in trading. It's what all of you keep pointing out and it's a valid point.

However, you've still got to make pips to make money. I think you're all putting the cart before the horse.

As I pointed out in my previous post, any system that can consistently make positive pips can have any type of risk and money control applied to it and potentially increase the amount of money won.

In contrast, the best risk and money systems won't make money if you can't make pips. Therefore, making pips has to come before anything else.

Perhaps we're splitting hairs here, perhaps not. All I know for a fact is that I have to make pips to make money. I've yet to find a way to pull money out of this market otherwise.
  • #106
  • Oct 30, 2009 10:16am Oct 30, 2009 10:16am
Quoting Dopey
I'm not disagreeing that risk control or money management play a significant role in trading. It's what all of you keep pointing out and it's a valid point.

However, you've still got to make pips to make money. I think you're all putting the cart before the horse.

As I pointed out in my previous post, any system that can consistently make positive pips can have any type of risk and money control applied to it and potentially increase the amount of money won.

In contrast, the best risk and money systems won't make money if you can't make pips....
Absolutly but im saying that pips are not the only thing that matters and the fact remains that while one trader achieves X pips more than another does not make him/her a better trader. You could have negative pips and be profitable and you can have positive pips and be on the other side. How profitable and non in terms of pips is also debatable. For some taking set pips is part of there plan. Do it often enough and work your edges in this market and you can make just as much, if not more than a trader that makes more simple as that. Those who think that pips is the be all and end all, well good luck. So long as your account grows who cares how it happens.

The arguement could go for millennia and still be a stalemate. Personally im over it. I could repeat my view till blue in the face. It really means nothing to those who are on the other side of the debate. Subsciption deleted.

Have a good weekend
  • #107
  • Oct 30, 2009 10:20am Oct 30, 2009 10:20am
  •  Shan
  • | Joined Jan 2009 | Status: Work To Live, NOT Live To Work | 19 Posts
Although it is possible, the odds of consistently losing pips yet growing an account month after month are that remote it's not funny. And if it did happen, you'd be taking a serious look at removing the strategies that were losing you those pips, and marketing the other ones as they must be near 100% accurate. I think those that doubt should have a good look at their trading statements, say over a year and bet they're all in green pip territory.
There's no denying it, the only way grow an account over time is to gather pips.
But you can think what you like!
  • #108
  • Oct 30, 2009 5:29pm Oct 30, 2009 5:29pm
I personally like to think in terms of pips and generally I would think most new potential retail traders do the same.

The reason for this is that they want to replace the income from working for a living by trading forex and their start up capital is small.

So for me I require, for example 500 hundred pounds per week.
I am trading a micro account,so my goal is to average 50 pips per week.
Multiply this by 10 pounds per pip.

Thinking in terms of per cent of his account for the new trader just starting out does not make sense.

I don't like to think in terms of money won or lost, for me it's just pips.
I use one lot size to keep it simple.

I'm not interested if my account has gone down 5% or gone up 8% I'm interested in how many pips up/down I am.

In my head I am playing for pips not cash, so as I improve and my lot size goes up, my head is not thinking in terms of cash.

For me it is easier to trade for pips, the physchological aspect of trading money may be another reason why traders fail so consistently.

The transition from 0.01 lot to 1 standard lot is easy mentally if I am constantly banking 50 pips per week.

However, when I play golf on Saturday mornings with my friends and they ask how I did, I tell them I made x amount of pounds..no point telling them I made 100 pips is there.

Similarly if I was working in a bank and the manager asks me my position at the end of the week, do you think I will say 'I'm up 68 pips'.

In the end it is an individual choice whether one retail trader choses pips over percent gained/risked etc as is which trading style they design.

My point of view for what it's worth.

Cheers J
  • #109
  • Nov 2, 2009 6:30pm Nov 2, 2009 6:30pm
I agree that risk/reward and ROI are better to measure performance of a trader,

however if i measure different trading systems i like to use pips in stead of money because i want to test the trading only and not the money management.

Just the RiskReward, avg loss, avg win, avg trade and max dd all in pips. (also some other things but less important to list all).
  • #110
  • Last Post: Nov 2, 2009 8:08pm Nov 2, 2009 8:08pm
Even ROI (I assume you mean Return On Investment?) isn't enough. Would you prefer 100 trades with an ev of 10%, or 10 trades with an ev of 50%? And again, even that isn't a straight forward comparison, because the fewer trades with the much higher ev can be larger.

We could then consider all of these and apply it to weekly or monthly intervals (i.e. x% return over the interval), but then different strategies will have different edges in different climates. Perhaps one strategy experiences an exponential return over a large trend, but is marginal at other times, while another strategy might produce linear returns and be relatively steady.

Best way to compare traders is to compare longterm success. It factors in edge, but also risk management, emotional stability, ability to adapt if needed, ability to develop greater skill and so on.

Quoting slimcat
In the end it is an individual choice whether one retail trader choses pips over percent gained/risked etc as is which trading style they design.
Sure, but some, such as the original poster, do not understand that not all pips are equal. You say pounds to your mates as that gives a clear impression of your performance.

Quoting Dopey
Show me a trader who consistently makes 200 pips a month and another who makes 100 per month (hypothetical numbers). It doesn't matter what type of risk control or money management each is employing, the former trader is a better trader. He can always ramp up his risk to the same level as the latter trader and make more money.
So, your conclusion is that all longterm traders are better than medium term traders, who in turn are better than all shorterm traders? Your suggesting that those who successfully trade the GBPJPY are better than those who trade the EURCHF? Pips mean something because that is the measurement of market movement. Other than that, it means little, unless all else is equal.
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