How many pips/week is "Killing it" in FX?

[topgunsoftware]

Quote from OddTrader:

3 - When you are trading frequently on a high leverage, the first thing you have to make sure about, is that you have chosen well your trading vehicle, i.e. the market.

The desirable market should have the following characteristics: be volatile, liquid, and have the highest possible ratio of average daily range divided by the bid/ask spread.

In FX this means basically one thing: EURUSD beats them all by a wide margin, the average daily range (last 50 days) is 108 pips, the Oanda spread is 1.5 pips, the ratio is 72.

This ensures lots of time/price opportunities, and gives you a chance to minimize the trading cost relative to the magnitude of your average trade.

4 - The type of profit you should be hoping for lies most of the time in the 5%-10% of the average daily range, irrespective of the actual trade frequency. This means you should be shooting for a profit of 6-12 pips on eurusd a day, on average. Why?

- Simple, because inefficiencies bigger than that are inevitably discovered and exploited by the market very quickly, so it is completely hopeless to expect more. If you can make 6 eurusd pips a day on 20 times leverage, you will make a 1000% yield in a year.

If you feel 6 pips is not much, then maybe you have very inflated expectations. If you ask me if I make more, I will say : sometimes yes, sometimes not, and keep it in mind, I have access to prices much better than those available on Oanda.

5 - When leveraged, you have to have an obsessive care about the trading costs, as each pip in high frequency trading makes a dramatic difference after a large number of trades.

This means you have to be very careful about how you define your entries and exits (market, stop or limit orders) and be realistic about an average expected outcome.

UQ

Point 3 - Agree completely

Point 4 - This statement is absolutely not true UNLESS you believe it. It sounds like a self emposed belief that limits your own trading OddTrader. Another trader, like myself, can believe that pulling 20 to 30 pips out of the currencies or 3 to 5 points out of the S&Ps is not that difficult and thus having no self limiting belief allows the trader to take opportunities that another trader who may be up 6 pips on the day would be afraid to take due to possibly losing and then being down. Another thing to keep in mind is that the average daily trading range may be 100 pips but if you look at all 10+ pip swings the total TRAVEL range can be 200 to 400 pips. Taking a measely 6 pips out of say 300 pips is not 5% but only 2% of the REAL range.

Point 5 - Totally agree

In this chart it is clear that the old adage support once broken becomes resistance. It was the low two days after it was formed and once broken was resistance for today's earlier breakout. It's no coincidence that today's high was almost exactly where this resistance level is. I took this screen shot much earlier in the day and before the big drop off but just this one trade gave the potential of 100 pips! I would not have caught 100 and many others probably wouldn't either but taking 20 to 30 pips off of such an OBVIOUS trade is entirely reasonable. With the volatility in the Forex I find having an ULTIMATE goal of a measely 6 pips hard to believe. In fact my partner taught his 16 year old daughter how to trade Forex and over the last week she made 71 pips in her tiny Oanda account. A beginning inexperienced trader using techniques that work was able to more than double this low goal.

Btw buying the 1.1825 area where it is clear there is support from days ago would have given another low risk trade making again 20 to 30 pips. Today a trader taking the two lowest risk and highest probability trades should be up no less than 40 pips. That's 666% more than your declared 6 pip max potential profit. I think its nice to have an absolute minimum goal each day but to say no trader can make more consistently than 6 measely pips a day is rediculous. I can see though that without precise timing tools most traders may not be able to expect anything more than that.

 

[topgunsoftware]

To further illustrate that 6 pips a day is NOT the max a trader can get, here is a regular chart. Just ignore my last post showing clear resistance at the high and support at the low which nailed both ends to within 5 to 10 pips. Those two trades easily are worth 40 pips. But ignore that trading strategy because most traders don't have market profile charts for the forex and have no clue where real support/resistance is.

Taking the sell signals when the market was above the R2 pivot level all worked and each trade was good for 10 pips. That's 30 pips right there.

Now forgot those trades and trade a common strategy. The yellow line is where the avg trader has a position. As you can see it acts as support for hours and once finally broken leads to everyone who is long to bail causing the big selloff. The market fell 60+ pips in less than an hour. Shorting that level anybody who knows how to trade could have picked up 20 to 30 pips.

Now forget the following trades I mentioned above, lets say you start trading at noon. The market has fallen over 100 pips so its not unreasonable to look for a bounce. Buying the S1 support level with 2 squat bar BUY signals easily could have picked up 15 to 20 pips!

Again I'm totally baffled that people believe 6 pips is the best a trader can do!!! It's not rocket science folks you just need better tools than stochastics, MACD and trendlines.

 

[OddTrader]

Q

Barclay Currency Traders Index

http://www.barclaygrp.com/indices/cta/sub/curr.html

An equal weighted composite of managed programs that trade currency futures and/or cash forwards in the inter bank market. In 2005 there are 90 currency programs included in the index.

1987 => 29.56%
1988 => 4.28%
1989 => 18.89%
1990 => 57.74%
1991 => 10.94%
1992 => 10.27%
1993 => -3.33%
1994 => -5.96%
1995 => 11.49%
1996 => 6.69%
1997 => 11.35%
1998 => 5.71%
1999 => 3.12%
2000 => 4.45%
2001 => 2.71%
2002 => 6.29%
2003 => 11.08%
2004 => 2.36%
2005 => 0.07%† †Estimated YTD performance for 2005 calculated with reported data as of December-29-2005 03:57 US CST

UQ

 

[topgunsoftware]

Quote from OddTrader:

Q

Barclay Currency Traders Index

UQ

This is absolutely irrelevent! Why? Because hedge funds and institutions tend to trade off longer time frames. Do you think they get in and out of their positions in 5 to 30 mins? They take far fewer trades than a scalper. You're comparing apples and oranges. In my best year I had about a 1,360% return. I doubt there has ever been a hedge fund or mutual fund with that return. I've never even come close to that return any other year however it was done on a small account with 20 to 1 leverage during the heydey of stocks. Stocks moved $5 to $30 points a day. In the prop firm I traded in there were guys who made 3 to 5X more than I did as they took more risk. Their % returns were even crazier.

Also do you realize how the managers of these funds are compensated? They usually get a small % - 1/2 to 2% plus incentives on profits up to maybe 20%. Even with a small fund with $100 million they only need to shoot for 15 to 20% returns to be HIGHLY compensated. If they shoot for higher returns and end up losing money they lose their backing and are done forever. Few people ever want to invest with a losing manager.

I realize I'm never going to change OddTrader's mind. He doesn't grasp that different styles of trading can lead to totally different results and a system a hedge fund uses that trades no more than 80 times a year and that is SHOOTING for 15 to 20% returns can compare with traders doing thousands of trades a year. From my experience it is a LOT easier to predict which way the market will move over the next 10 to 20 minutes vs the next few weeks. Anybody who doesn't believe this has not learned how to successfully scalp and find low risk entries. If you take 30 pips a day out of the market that is 150 pips. Correctly timing it to hold for a few days to a week to make 150 pips in one trade is a LOT harder and will require 50 to 100 pip stops. Recovering from just ONE bad trade is thus even more difficult. Recovering from a scalping systems measely 10 pip loss is pretty easy as I showed last week.

Free trade idea today. If the Euro comes up to the 1.1845 to 1.1850 area today it will be a safe short, Stop above 1.1865. For buys the first touch of 1.1786 should be safe with a 10 pip stop, profit target around 1.1815. Nice 30 pip move but only if the Euro drifts down to that level. Any wide range move down on incereased volatility voids this trade. The high of today is not likely to be more than 1.1900 so that would be another safe shorting zone.

 

[OddTrader]

Q

Beware of the Hidden Risks in Foreign Currency Trading

http://www.albertasecurities.com/?currentPage=5376


The Alberta Securities Commission (ASC) is warning Albertans about potential hidden costs and the high degree of risk related to seminars or computer programs promoting foreign currency exchange trading, known as FOREX or FX Trading. While advertisements claim one can learn to trade quickly and easily on the foreign exchange market, the fine-print disclaimer invariably states otherwise.



Through newspaper, radio, television and Internet advertisements, Albertans may be solicited to purchase software or sign up for trading courses to learn to invest in the foreign currency exchange market. Advertisements often promise large profits on currency trading; however, consumers should be aware that foreign exchange contracts are extremely risky ventures. In addition, companies may promote foreign currency trading software packages that cost thousands of dollars. Free demonstrations of the software are often accompanied by high-pressure sales tactics.



What the Ads May Promise:

*
You won’t find an easier, more tested and flexible way to put dollars in your portfolio.
*
You can make profits with as little as $300.
*
You trade without commissions and trading is available 24 hours a day, six days a week.
*
The FOREX market is the largest financial market in the world and provides more opportunities than you’d ever get in the stock market.
*
The seminars will prove how easy it is to make money from currency trading.

What They Don’t Tell You:

*
The software being promoted looks at past performance to identify trends in currency trading. It uses these trends to predict the currency’s value in the future. As helpful as the software seems, it cannot accurately predict market fluctuations, nor can profits be guaranteed
*
While there may be no commissions, the promoters make money from the sale of the software and on the “spread” between the buy and sell quotes made on each purchase and sale.
*
Individuals who attend free demonstrations may experience high-pressure sales tactics and be asked to purchase software programs for thousands of dollars.



The Fine Print

The ASC advises consumers to be aware of the fine print on any offer making extravagant claims about investment returns as the ad may not be telling the whole story. However, the fine print provides a wealth of knowledge about what the software actually delivers:

*
Trading in foreign currencies involves substantial risk.
*
Investors should have the appropriate financial and business experience before investing in the FOREX market.
*
Software is a tool that tracks past performance. It does not replace research or licensed investment advice.
*
Past performance does not ensure future results.
*
No system that analyzes trends in foreign currency is free of risk. The system cannot factor all the variables capable of influencing market fluctuations.



In general, foreign currency can be traded legally; however, investors should be aware of the potential risk involved in FOREX trading. Should you decide that FOREX trading is suitable for you, the following seven steps are useful in safeguarding yourself in the foreign exchange market:

1. Be wary of opportunities that sound “too good to be true”



Be cautious about any opportunity promoting exaggerated returns on investments. Be especially careful if you have recently acquired a large sum of cash either through a retirement fund or other means. These funds are attractive targets for fraud.



2. Stay away from offers that promise little or no financial risk



Be sceptical of any company that downplays the risks or asks you to sign a risk-disclosure statement, secrecy, or confidentiality agreement. Trading in foreign currency is volatile and poses high risk for consumers. You should not invest money you cannot afford to lose.



3. Avoid margin trading (leveraging) unless you understand its consequences



This type of trading makes investors responsible for far more money than they have invested. If you trade on margin, be prepared to accept losses that exceed your investment. In some cases that amount may be 100 times the original investment.



4. Be suspicious of “intrabank markets”



Fraudulent firms will often tell customers that their funds will be traded in the “intrabank market.” Be suspicious of this offer as this market is normally reserved for banks, investment banks and large corporations.



5. Don’t send or transfer cash on the Internet



Be alert to the dangers of trading online. It’s easy to trade but often impossible to get a refund. Fraudulent companies can set up Internet websites easily to reach a large audience. Many of these companies will transfer your money overseas where it will be difficult, if not impossible, to trace or recover.



6. Get the company’s track record



Get all the information you can about the firm or individual’s performance record. Remember that it could be very difficult to verify the information you receive. Even a glossy brochure or a stylish presentation may contain false information. Ask presenters to be specific about what makes them experts in the subject matter. Just because they appear or claim to have made a lot of money investing in foreign currency doesn’t mean it’s true (a fraudster may have made hundreds of thousands of dollars off the backs of unsuspecting investors who never bothered to ask questions).



7. No background, no investment



Check any information you receive to make sure the company is and does what it says. Call the Alberta Securities Commission (and Better Business Bureau or Investment Dealers Association) to get as much information about the organization as you can. Ask for written information from the company. Be wary of confidentiality agreements as this often means the investment is a scheme. If they cannot satisfy these requests, it is best to avoid investing through this company.



If you have any questions about the legitimacy of an investment, please contact the ASC at 403-297-4296, toll-free throughout Alberta.



The Alberta Securities Commission is the industry funded regulatory agency responsible for administering the Alberta Securities Act. Its mission is to foster a fair and efficient capital market in Alberta and, together with the other members of the Canadian Securities Administrators, develop and operate the Canadian Securities Regulatory System.


© 2005 Alberta Securities Commission. All rights reserved. Disclaimer



UQ

 

[leveraged]

How many monthly pips do professionals make on average?

 

[cabletrader]

Quote from leveraged:

How many monthly pips do professionals make on average?

You do realize this thread is like two and a half years old?

There's a poll at the top of the page should give you your answer