Swoop, I agree with you, but I think Nana considers average pip per day for analysis purposes.... like some would use expectancy for analysis purposes.
my stops can range anwyhere from 20-80 pips.... on average it is 45 pips. With 65% accuracy, and average reward/risk ratio of 3. Anywhere from 1-2 dozen trades per month. Remember, pound is a bit more volatile than euro. If I were to trade the euro my risks would be a bit less (my guess around average of 30), but it would also make less money. When I did my backtesting from 2002 to the end of 2003 my max consecutive drawdown was 5. In 2004 volatility increased and my max consecutive drawdown actually doubled to 10, but at the same time my profitability was much greater. 2005... I have no clue what it's going to be. If I follow my rules I give myself the chance for my edge to work. I shorted pound 2.5 hrs before the news release, and I move my stop to breakeven when I have 30+ unrealized gain. I got stopped out at b/e then price proceeded in my direction. I had no reason to short again, and I had to let the market go. This can be traumatizing... actually it used to be traumatizing to me. I just had to understand to let the math (edge) work its course, and not force profits to come my way. I'm mechanical though. What I do is very boring. That's why I like to learn new setups and try to make those ideas work. Actually, it can be quite frustrating sometimes, haha. That just shows my immaturity as a trader though. Anyways, trying to make my ideas into profitable system is very exciting to me. Btw, I don't scalp. I think when I am more advanced and more experienced I will try some scalping technique. I agree with Dave. Scalping can be close to impossible. If you are making mistakes... lets say 5-10% of the trades are mistakes, multiply that amount by the high frequency of trades scalps generate... that can be quite damaging to the account. I think scalpers need very reliable method in order to make money consistently. Besides, we are not pit traders... we don't have their edge. With all the increased spamming here, I don't mean to sound like an informercial. I can't reveal anymore of what I do. I put in the hours to make this idea work, and I'm not even going to sell it. I like to read what's going on here. I work at home and I have no co-worker. ET is a community to me. I find that a lot of people are lost and unsure of what they're doing. I am revealing this information so maybe some of you may question yourself... just as I have to myself. I am by all means no expert or guru. Some people have scolded me here for my lack of understanding of the market. We are all human and all students in this game. cheers, Andy
I would agree with maxprofit. I was going for 12 and 30 point trades with a 4-7 point stop when I was trading euro last year. This reflected the european morning sessions swings but would also be appropriate in the US morning session. If I had moved to 30 min bars I think I would have looked for 50-100 pt moves. Currently given it up for the HSI because the hours are more convenient. Still like the way the currencies move though and will go back if I change time zones or develop more stamina
I agree with Andy that 100 plus pips gain can be achieved in less time. I trade the GBP/USD pair and I set my TP to 105 pips. Most of these profitable trades are achieved just between 4 to 8 hours. Regarding my stops, my maximum stop is 35 pips.
Andy, Do you use indicators for your system? Or is it a system based on trendlines, support and resistance?
I use barchart, macd, and another indicator for my exit strategy... and no to your other questions. I wanted to try using ATR's for exit strategy but I'm too lazy to calculate things. http://www.elitetrader.com/vb/showthread.php?s=&threadid=40343 this is a good thread. It doesn't really pertain to your question, but I like the way dbphoenix thinks. He asks some very good questions that traders should ask themselves. http://www.elitetrader.com/vb/showthread.php?s=&threadid=29005 DP uses trendlines, and maybe this thread gives you some ideas. I don't use any of his ideas, but I just like the way this guy thinks. There is no bullshit in this guy. He's straight to the point in my opinion. There is no secret weapon really. I have the same psychological vulnerabilities as everyone. I have the same indicators on my charts that are available to everyone. I have the same books everyone else has in their personal library. A lot of the tools out there work. It's just a matter of finding a tool that you like, and learning how to use that tool correctly. There is no grail... that's it.
IMHO making a steady and reliable average of 20 pips per day off any one specific instrument is pretty difficult and an excellent result. In some senses the number of pips per day that you can make is actually less important than the reliability, though. An average of (say) 400 pips per month (about 20 per trading day) is not so clever if it conceals a 500-pip drawdown, and it will require totally different money management from a system which produces something in the range of -20 to +60 pips per day (which might also average out at +20). IMHO many traders do not adequately take the variability into account in working out their position-sizing. This subject is well discussed in the books "Trade Your Way to Financial Freedom" by Van K. Tharp and "Beyond Technical Analysis" by Tushar S. Chande. But how many traders start risking their money without reading these books or something equivalent, and/or without understand the concept?
But sadly this is often the case. People sometimes tell me about signalling services which have independently verified results over many months showing a few hundred pips per month of profit, but you need to look carefully at every trade made, remembering that the biggest drawdown is the one yet-to-arrive, and see what's really going on, working out the variability very accurately before leaping in with your desired position-sizing which might kill you off at some point.