I don't get how 10 pips a day can make you rich? | Forex Factory

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I don't get how 10 pips a day can make you rich?

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  • Pips per day
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  • #1
  • First Post: Edited 4:03pm Nov 18, 2010 12:47pm | Edited 4:03pm
Would you guys be satisfied with 10 pips a day (risking 2% per trade) Would this be enough to build your account in the long run to live sucessfully? What do you guys think?
  • #2
  • Nov 18, 2010 12:51pm Nov 18, 2010 12:51pm
10 pips/day = Suckers game

don't lose your precious time
It's all about your stomach lining...
  • #3
  • Nov 18, 2010 1:01pm Nov 18, 2010 1:01pm
Quoting patmarch
10 pips/day = Suckers game

don't lose your precious time

What do you mean? and that doesn't really answer my question I didn't ask how it was done or if it could be done, i just dont get the math on it! Do you have to change your leverage or.. that's what I don't get!
  • #4
  • Nov 18, 2010 1:12pm Nov 18, 2010 1:12pm
I think you'll find that on some days you'll be very happy to just break even and on other days you can make much more then 10 pips. It's difficult to sit down behind your pc in the morning and say "let's make 10 pips today", you just don't know what the market is going to give you. You just execute your strategy and if you do that well and your system is sound then you might end up with some money at the end of the day.

For sake of arguement, if you make 10 pips a day you can become rich because as you make more money you can raise the size of your trades (bigger lots).

This is just my take though. People with more knowledge and/or experience might tell you otherwise.
  • #5
  • Nov 18, 2010 1:16pm Nov 18, 2010 1:16pm
Sorry ! You're right I didn't answer your question at all...

I think you might be interested in a paper by Rob Booker..."System 10" if I remember well...

Still a suckers game though...but then you should the math you want !

Take care !
It's all about your stomach lining...
  • #6
  • Nov 18, 2010 1:42pm Nov 18, 2010 1:42pm
I love the idea of 2 pip stop, but I don't fully understand how this helps you.

Since your using such a small stop that means your pip is worth more on each pip correct? I don't understand how you do this though (I come from stocks)

Could you give me an example of how to figure out how to get the biggest pip size with solid money management (2% risk / trade) What's the math to do that? It has completely confused me!!

Thanks a lot! Joe
  • #7
  • Nov 18, 2010 1:53pm Nov 18, 2010 1:53pm
Here's a clue...but keep in mind that I really don't like this kind of trading and that some others guys here could help you better with this "get poor quick" type of trading...

account = 1000$
2% = 20$ risk.

20$ / 2 pips = 10$ a pip.

1 standard lot = 10$ a pip...or 100 000$ of base currency.

SO...according to this you would buy 1 std lots of base currency or 100 000 $

Buying 100 000$ with an account of 1000 gives you 100:1 leverage which I think is the maximum allowed in the U.S.

Don't forget the spread though...EURUSD usually deals at 2 pips spread...so your stop loss would theorically be hit as soon as you open the trade...

This kind of trading isn't good...you'll go broke at lightning speed

Enjoy
It's all about your stomach lining...
  • #8
  • Edited 2:12pm Nov 18, 2010 1:54pm | Edited 2:12pm
On platforms where percent of account risked can be set, along with stop loss and leverage, suppose it means risking 2% per trade. As the account increases, the size risked will also increase, staying at 2% per trade. Otherwise you need to adjust your risk manually. Then we can do compounding on the calculator and fantasize.

Suppose you make 2% per day with $1000. Then you make your million in about 350 trading days.

1000(1+.02)^350=1023435 <- compounding formula via google

Wait I just confused myself. What I mean of course is that about your reward too.
  • #9
  • Nov 18, 2010 2:57pm Nov 18, 2010 2:57pm
Quoting patmarch
Here's a clue...but keep in mind that I really don't like this kind of trading and that some others guys here could help you better with this "get poor quick" type of trading...

account = 1000$
2% = 20$ risk.

20$ / 2 pips = 10$ a pip.

1 standard lot = 10$ a pip...or 100 000$ of base currency.

SO...according to this you would buy 1 std lots of base currency or 100 000 $

Buying 100 000$ with an account of 1000 gives you 100:1 leverage which I think is the maximum allowed in the U.S.

Don't forget the spread though...EURUSD usually deals...
Why are you such a hater of this method? I've seen a few traders that trade this way and make a killing! My plan is to watch on the 5 minute chart for a breakout of a range or rejection of s/r and wait for a reversal candlestick then go down to the 5 second chart with my 2 pip stop loss and move it to break even ASAP!
  • #10
  • Nov 18, 2010 3:26pm Nov 18, 2010 3:26pm
Good luck !
It's all about your stomach lining...
  • #11
  • Nov 18, 2010 3:42pm Nov 18, 2010 3:42pm
Quoting beehivesjoe
Hey, sorry for the newb question, but I'm newer to forex (from stocks) and this has been driving me crazy and I can't figure it out!...
The assumption is that you don't touch the principle. As your account grows (assuming the same stop size for each trade) the number of lots you purchase with 2% risk will grow.

The example below ASSUMES that you do not have a losing trade EVER:

Taking your starting point of 1,000 and I assumed a roughly 50 pip stop you would start with around 4 micro lots. At 10 pips profit you would see a commanding 4 dollars in profit. Don't touch the principle and compound that over the next oh let's say 7 years or so.... and your account balance sits at over 1,000,000 and your are purchasing nearly 49 standard lots per purchase to maintain your 2% risk profile. Now, those 49 standard lots with 10 pips profit is around $4,900 a day or about 1.2 million dollars a year assuming you don't take a vacation and trade every single available day.

And that's how 10 pips a day will make you rich.....of course it looks all pretty and simple on paper putting it into practice well that's a whole other ball of wax.
  • #12
  • Nov 18, 2010 3:50pm Nov 18, 2010 3:50pm
10 points shouldn't be that difficult esp a high volume session such as the ny/london overlap.. just a matter of being patient and look for a intra-day trend and purchase on a pullback, or breakout.

My suggestion would be a low volitile pair(s) for that particular reason... be cautious, because some pairs can sneeze 10 points in mere seconds.
lowest draw down possible please.
  • #13
  • Nov 18, 2010 3:58pm Nov 18, 2010 3:58pm
What do you guys think? Do you think if you could get 10 pips a day it would be a good strat??

I will be playing only the Eur/USD. .9 spread and i believe if you only trade one pair you will learn how it moves. If you make 10 pips would you say call it quits for the day or keep trading? Would you guys be satisfied if you made 10 pips a day?


Thanks for the feedback guys!
  • #14
  • Nov 18, 2010 4:45pm Nov 18, 2010 4:45pm
what type of trading would you recommend?

thanks
  • #15
  • Nov 18, 2010 5:06pm Nov 18, 2010 5:06pm
Quoting beehivesjoe
What do you guys think? Do you think if you could get 10 pips a day it would be a good strat??

I will be playing only the Eur/USD. .9 spread and i believe if you only trade one pair you will learn how it moves. If you make 10 pips would you say call it quits for the day or keep trading? Would you guys be satisfied if you made 10 pips a day?


Thanks for the feedback guys!
If you could always make 10 pips a day, no sweat, then sure, 10 pips is enough to make anyone a multi millionaire... on paper, anyhow. However you should probably look at other similar x pips a day threads and see how they ended up.

About calling it quits or not, presumably you're only trading certain "setups" or whatever it is that makes you enter the market, so in that case you'd probably want to take whatever the market gives you. No point making less if the market wants to give you more, plus some days you will lose and then look for any excuse to enter the market just to make your 10 pips, take worse setups and lose more, so if you see good setups after you've made your 10 pips then take them - you'll need better-than-10-pip days to balance out your losing days.
  • #16
  • Nov 18, 2010 5:11pm Nov 18, 2010 5:11pm
Lets say, after an extensive period of live trading, your trading routinely averages 50 pips each week and without any draw-down that crucifies your account. Then you are in a position, assuming you have the capital, to increase the value of each pip.

a trader i read about averaged just 40 pips a week over a year, he traded just a couple of times a month, but at 200 contracts ($2000/pip), he was making $80,000/wk av.

moral of the story, as long as you have consistent results week after week, and the required TC, you are in a position to increase the pip value and your return, without needing to make more pips.

it's beautiful really, you dont need to work harder to increase your return, just be consistent, then you can trade more contracts with confidence
  • #17
  • Nov 18, 2010 6:50pm Nov 18, 2010 6:50pm
Thanks for the reply! So far it sounds like it can be done.. you just have to be super diciplined!
  • #18
  • Nov 18, 2010 7:11pm Nov 18, 2010 7:11pm
Do yourself a favour and wipe the word "PIP" from your vocabulary.... % is all that matters.

10 pips a day means nothing... 2 pip stop means nothing
Time hides Nothing
  • #19
  • Nov 18, 2010 7:29pm Nov 18, 2010 7:29pm
Quoting CindyXXXX
Do yourself a favour and wipe the word "PIP" from your vocabulary.... % is all that matters.

10 pips a day means nothing... 2 pip stop means nothing

Can you go into a little more detail about this please?
  • #20
  • Nov 18, 2010 7:39pm Nov 18, 2010 7:39pm
your stop losses are going to be different from trade to trade. Your "trading system" should determine your stop loss levels. You will determine the $ percentage of your account you want to risk and that will determine your position size.

Divide the dollar amount you are willing to risk by your desired stop loss (pips) and use that to determine the size of position to trade.. You will have a general stop loss size that you trade with, but it should be based on the trade you are trying to take and not always 2 pips or always 5 pips... Just don't risk more than you are willing to loose... ever.. and yes, dicipline is the key to your success
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