Average Pips move profit per day in FX Markets

[illiquid]

Quote from OddTrader:

Probably due to profits/ losses of a day are determined by the number of points movements and lot/ contract size, an average range in terms of points would determine the potential range/ average/ maximum of profits/ losses for the day.

I thought profits/losses per day was determined by the effectiveness of one's edge and ability to read the market; avg range just measures typical volatility, which should only factor into position size and stop placement as risk increases equally with potential reward -- please correct me if I'm wrong. Take a chart of any liquid currency and wipe away the numbers along the y-axis; does it really matter whether the difference between high and low is 30 pips or 130 pips? The picture will be the same.

Anyways, not trying to be hostile at all, it's just the impetus behind the original question of the thread which bugs me. Average profit per trade, per day, per year -- who cares? Would you really trade any different if you were told a 10-pip profit was great for your time frame? How about 30? Or 100? They're all completely useless for helping one's trading. If you go into trading forex with the attitude that one should take X amount of pips per day, since 2X or 3x or 10X is the avg range; or thinking surely one can take out a mere 5% of the daily range each day, that doesn't sound so hard or greedy at all; you are just setting yourself up for disappointment in either case. People get suspicious when some site claims you can make 50 pips a day -- as if 5 pips wasn't just as hard or incredulous for someone to sell.

All profitable traders will end up with some arbitrary percentage made on whatever time frame they trade at; the "avg number" for the "avg trader" on the "avg day" is completely meaningless. If you're looking for some benchmark to compare yourself to, or just trying to see what's possible, don't bother asking -- it can only hurt you by putting limits on what is essentially limitless potential, in both risk and reward.

Edit: and for those of you on the opposite spectrum who say a couple hundred pips per month "should be doable" -- god bless you all, you "should" all be retiring within a few years!

 

[Baruch]

Quote from Andy62279:

I'm not trading euro this year, but the pound instead.... but I am currently trailing the pound with 210+ pip profit since last night. Since the pound and euro are pretty much in sync right now, the same trade on the euro would be about the same profit as well.

I don't think so. Euro don't move as much as pound.

 

[OddTrader]

Quote from illiquid:

I thought profits/losses per day was determined by the effectiveness of one's edge and ability to read the market; avg range just measures typical volatility, which should only factor into position size and stop placement as risk increases equally with potential reward -- please correct me if I'm wrong. Take a chart of any liquid currency and wipe away the numbers along the y-axis; does it really matter whether the difference between high and low is 30 pips or 130 pips? The picture will be the same.

Many thanks Illiquid for the feedback.

Say a trader would like to maximise his returns on invested deposit/ risk, and he has two markets to trade/ choose: EUR/USD at price level 1.5000 with average range 100 pips, and AUD/USD at price level 0.7500 with average range 50 pips. As these two markets have extremely high (assuming 100%) correlation, the trader naturally could use the same system of same edge to capture a fraction of movement for profits.

Basically the price movement in terms of pips of individual pair during a same time interval would not be the same, even their charts/ pictures will be likely looking the same.

For EUR/USD, a 15 pips profit is 1% of 1.5000 or 15% of 100, that would be considered feasible by some general traders (the trader included).

Whereas for AUD/USD, a 15 pips profit is 2% of 0.7500 or 30% of 50 pips, that might be considered quite differently (if not impossible) by the same general traders. If it can be done by the trader, he would then simply choose to trade AUD/USD for doubling his profits by using the same margin deposit for the aim of doubling his returns.

I'm not trying to conclude anything, but the above are my views.

Quote from illiquid:

Anyways, not trying to be hostile at all, it's just the impetus behind the original question of the thread which bugs me. Average profit per trade, per day, per year -- who cares? Would you really trade any different if you were told a 10-pip profit was great for your time frame? How about 30? Or 100? They're all completely useless for helping one's trading. If you go into trading forex with the attitude that one should take X amount of pips per day, since 2X or 3x or 10X is the avg range; or thinking surely one can take out a mere 5% of the daily range each day, that doesn't sound so hard or greedy at all; you are just setting yourself up for disappointment in either case. People get suspicious when some site claims you can make 50 pips a day -- as if 5 pips wasn't just as hard or incredulous for someone to sell.

All profitable traders will end up with some arbitrary percentage made on whatever time frame they trade at; the "avg number" for the "avg trader" on the "avg day" is completely meaningless. If you're looking for some benchmark to compare yourself to, or just trying to see what's possible, don't bother asking -- it can only hurt you by putting limits on what is essentially limitless potential, in both risk and reward.

My own experience is that certain (pseudo-)benchmark information (realistic ones) would be not only useful, but also important, at least to me. I would like to find out why for the difference in order to spend time for improving the returns of my investment/ risk, which is the aim of the whole process and my business, imo.

If currently I make 5 pips (just covering my living expenses) on average daily and I know the benchmark is 10, I will try to do something harder (I wouldn't keep trading the same way by awaiting doubling returns.). If I know the benchmark is no one can make any profits by trading XXX/YYY although I'm constantly making 5, I will change to trade another better pair with 10.

 

[illiquid]

Quote from OddTrader:

Basically the price movement in terms of pips of individual pair during a same time interval would not be the same, even their charts/ pictures will be likely looking the same.

For EUR/USD, a 15 pips profit is 1% of 1.5000 or 15% of 100, that would be considered feasible by some general traders (the trader included).

Whereas for AUD/USD, a 15 pips profit is 2% of 0.7500 or 30% of 50 pips, that might be considered quite differently (if not impossible) by the same general traders. If it can be done by the trader, he would then simply choose to trade AUD/USD for doubling his profits by using the same margin deposit for the aim of doubling his returns.

Not sure, but are we arguing the same point here? My point was that a system will capture a certain percentage of range of any given currency, the number of pips doesn't matter. Theoretically, if aussie has half the range, the same trader applying the same edge (assuming all else being equal, which it ain't) will get half the number of pips trading AUD; he would just double the position size to compensate. Asking what the average daily range of the euro compared to the aussie is a completely different question vs what is considered "average" or "good" profit per day in either.

If currently I make 5 pips (just covering my living expenses) on average daily and I know the benchmark is 10, I will try to do something harder (I wouldn't keep trading the same way by awaiting doubling returns.). If I know the benchmark is no one can make any profits by trading XXX/YYY although I'm constantly making 5, I will change to trade another better pair with 10.

If you make 5 on currency X, it's because that's what your edge yields you; if knowing the "avg" is 10 makes you work harder, fine, use the motivation. But knowing that fact won't give you a step up in improving your edge.

 

[OddTrader]

Quote from illiquid:

My point was that a system will capture a certain percentage of range of any given currency, the number of pips doesn't matter.

Agree.

Quote from illiquid:


... in improving your edge.

Yes, an improved (or a newly developed) edge is required.

 

[Andy62279]

Quote from Baruch:

I don't think so. Euro don't move as much as pound.

you are right, but January of this year it has

 

[OddTrader]

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[jonnyy40]

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