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

[topgunsoftware]

Quote from uninvited_guest:

topgunsoftware ............. All Forex traders can make +30 pips in one day as you have done. You have NOT consistently made 30 pips a day over a period of time as you have claimed. A period of time in my opinion would be at least 1 week, but 1 month would be better to prove a trading system.

You have only plugged up this thread with useless graphs and BS.

From the questions and comments I have received I would disagree with this. From what I can see I'm the only one talking about trading techniques and how many pips they can catch using them. I'd love it if someone else would also share some trading ideas that work.

I was asked to trade it live and show that it works and I did. I primarily trade the S&P and Russell and anybody is free to try these strategies themselves. Again I dare you to take the trades in a FX simulator and prove me wrong. I'd LOVE to see that. You will most definitely see that they not only work but are actually LEADING indicators unlike 90% of the tools in other packages.

Quote from Chood:

No forex trader has lived who can profit by risking 2 for one. One for one is a terrible risk/reward, and risking even one for a profit of two is amateurish, except in compelling circumstances. Add to those points the silly notion that this catastrophic risk/reward can overcome via 10-pip bites, defeating in the process even a 1 pip spread (10 percent of the profit target, but likely higher due to higher spread), and the nuttiness of this strategy is evident.

Absolutes are rarely true. I was never recommending a person trade with stops twice the profit target but lets be clear. A system that is over 67% winning can be profitable with losses twice the winners. It's simple math. I only pointed out the % winning trades and also mentioned that most of the time a trader can pickup 10 pip profits instead of 5. Many intraday scalpers use 1:1 risk reward systems. It's quite common in the futures market. As you saw from my trading I took 10 pip profits and used 10 pip stops. When I KNEW I had a trade that was going to go more than 10 pips I took 17 and I got out with only half the potential profit. Knowing that a system is 75 to 80% profitable for a 5 pip profit using a 10 pip stop and using discretion can allow a scalping type trader to trade better than the system's backtest results. As you saw I was 75% profitable with over a 1:1 risk reward. There was also one trade that I knew wasn't going to continue my way and I bailed early with less profit. It all comes down to experience. I have traded for 6 years and probably 30 million shares of stock and tens of thousands of emini contracts. When scalping the futures I have had days where I've taken 100+ trades. So I kind of have an idea of how to read order flow and know if my assumptions will prove right or not.

Most experienced traders use discretion. I personally don't like taking signals after the market has been in a period of low volatility as it is then MORE likely to make a trend move and my risk of the trade is higher. Also during low volatility times the time required to make 10 pips is a lot longer. Every trader needs to know what time frame they trade on. Knowing which signals to take and which not to and what ZONE the market is in is very important. I will often fade moves from S1 to R1 but try to take more trend signals when above R1 or below S1.

I trade on a 5 min chart and like to be in and out in 5 to 20 mins max. This probably won't work for some traders. Also by watching the Forex Level II I can see if my belief about market direction is right or not. I can get out of trades that would otherwise turn into losses. I may make a few pips or lose a few pips but won't take the full loss. I did that the other day when I realized I wouldn't make the full profit target and took less. Why take a loss when you can take a smaller profit?

I mainly trade the futures and watch our Time and Sales window that shows what the largest traders are doing. I reset it when in a trade and it lets me see how much buying vs selling is going on. That's one reason I trade the futures and not Forex, increased edge thats not available in the Forex. I watch the 100 lot traders in the S&P as they TOTALLY move the market.

So instead of bashing strategies that obviously work why not post some of your own with examples. I'd rather learn something new than waste time bickering.

 

[topgunsoftware]

I think I have discovered why there seems to be so much disbelief that a trader can pick up 20 to 30 pips consistently.

On Dec 22 the daily trading range was about 87 pips but if you count every 10 pip move the Euro moved about 600+ Pips! I hope now you can see that catching 30 pips is not so unreasonable.

One thing traders RARELY do when talking about a strategy is to discuss the time frame it is meant to be traded on. Let's be clear, I am referring to trading the currencies using scalping like techniques however unlike futures or stocks the hold times can be 20 to 30 mins instead of minutes.

Catching 20 to 30 pips out of 600 total pip moves now does not seem too unreasonable. I hope this clears up the mystery to those following this.

Money managers do not scalp in and out like this so whoever mentioned comparing my trading and systems to money managers is totally unreasonable. There are individual traders who can make a hundred+ percent a year trading (due to the leverage) but hedge funds and other money managers with their longer trading time term horizon can not. They trade for weeks and months while I am talking about trading for minutes. I hope now you realize how rediculous it is to compare the two methods.

The key to making money trading is to have the highest winners as possible, with the highest profits possible, the lowest losses possible AND to have a LOT of trades. Trade frequency makes a HUGE difference and in my opinion is one of the most important. I personally prefer trading systems that have a LOT of trades as the real world trading results tend to more closely equal the backtested results and obviously can be improved even more with discretion. You tend to learn when trades don't work as well and when they do and know when to trade larger size or take larger profits than normal.

 

[OddTrader]

http://www.elitetrader.com/vb/showthread.php?s=&postid=934791#post934791

Quote from OddTrader:

A new hope for scalpers of euro futures:

 

[traderob]

Quote from topgunsoftware:

I was asked to trade it live and show that it works and I did. I primarily trade the S&P and Russell and anybody is free to try these strategies themselves. Again I dare you to take the trades in a FX simulator and prove me wrong. I'd LOVE to see that. You will most definitely see that they not only work but are actually LEADING indicators unlike 90% of the tools in other packages.



Absolutes are rarely true. I was never recommending a person trade with stops twice the profit target but lets be clear. A system that is over 67% winning can be profitable with losses twice the winners. It's simple math. I only pointed out the % winning trades and also mentioned that most of the time a trader can pickup 10 pip profits instead of 5. Many intraday scalpers use 1:1 risk reward systems. It's quite common in the futures market. As you saw from my trading I took 10 pip profits and used 10 pip stops. When I KNEW I had a trade that was going to go more than 10 pips I took 17 and I got out with only half the potential profit. ng.

Let me be direct as I think you haven't understood some points.
1. Given spread and normal trading conditions two of your trades would have made about 2 or 3 pips - assuming you got in exactly where you said (which coincidently was at the extreme tick).
2. The third one you lost money.
3. The last one was a good trade- except that as we saw you could never have made it as it never traded where you said you made the entry.
4. You explain how you usually trade russel and sp. So it is obvious you joined this thread to shill your software- which imho no different from 100 other vendors software.

 

[OddTrader]

Quote from late apex:

Clearly, that was never a bona fide, good-faith offer in the first place.

Why is that, you might ask? Take a look at conditions #3 and #4:


Those 2 conditions, out of 6, are unreasonable; deal-breakers. There are 2 possibilities I can think of:

1) by putting those ill-conceived conditions in, the author of the challenge shows that he has little understanding of how the forex market works and what it takes to be consistently profitable in it over the long term.

or

2) the author of the challenge is slightly more clever than that and does realize that forcing a trade nearly every day and demanding a tight stop are high barriers to success. Therefore he deliberately put those conditions in, to strongly discourage any would-be challengers who might otherwise be interested.

Of course, all this is really moot. The odds that the author of the challenge has anywhere near $1,000,000 burning a hole in his pocket, are slim to none.

blueingreen the author of this offer/ challenge is currently investigating a scalping system, a white box with fully disclosed details, which was introduced by another trader iGoR who claims the system can generate profits of 20% monthly consistently when using 50:1 leverage.

http://img489.imageshack.us/my.php?image=pullback14ah.png

 

[late apex]

Using a spreadsheet I've long relied on precisely for this type of expectancy estimation, in order to achieve 20% monthly returns at 50:1 leverage requires average P&L of 2.4 pips daily, or 48 pips monthly, or 576 pips annually.

That's being somewhat conservative, figuring 20 trading days per month and 240 trading days per year, as well as without any compounding of profits. More trading days or applying any compounding would further decrease pips needed.

Sure, +2.4 pips P&L per day on average, long-term, is entirely possible. I hope the author is not presenting that "white box" system as something special or impressive?

The only (minor) assumption, affecting maximum position size for a given leverage, is that EUR/USD is the only currency pair traded, around 1.20 level. If Euro averages under 1.20, max position size would increase, and it would take ever fewer pips on average, to hit +20% monthly return target at 50:1. For example, @1.10, it would take 2.2 / 44 / 528 pips daily / monthly / annually.

Conversely, if Euro averages over 1.20, max position size would decrease, and it would take more pips. For example, @1.30, it would take 2.6 / 52 / 624 pips d / m / a. As you can see, the impact of EUR/USD level on pips needed is rather minor.

 

[OddTrader]

Not too bad for this white box system is a free of fees one.

 

[late apex]

Quote from OddTrader:

Not too bad for this white box system is a free of fees one.

OK, I agree with that.

Quote from OddTrader:

blueingreen the author of this offer/ challenge is currently investigating a scalping system, a white box with fully disclosed details, which was introduced by another trader iGoR who claims the system can generate profits of 20% monthly consistently when using 50:1 leverage.

http://img489.imageshack.us/my.php?image=pullback14ah.png

Incidentally, wouldn't this system fail to meet the above condition #6 set by blueingreen?

"- the average weekly profit has to be not less than 100 pips (taking into account Oanda's execution)"

Namely, 100 pips a week in EUR/USD on average, at 50:1 leverage, translates into 167% monthly returns, not the system designer's claimed 20%.

 

[OddTrader]

Quote from late apex:



Incidentally, wouldn't this system fail to meet the above condition #6 set by blueingreen?

"- the average weekly profit has to be not less than 100 pips (taking into account Oanda's execution)"

Namely, 100 pips a week in EUR/USD on average, at 50:1 leverage, translates into 167% monthly returns, not the system designer's claimed 20%.

No, this 20% system is not related to the challenge offered by blueingreen. However, he has more analysis about the details of why there is a limit of making maximum pips.

Q

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

 

[topgunsoftware]

Quote from late apex:
Why is that, you might ask? Take a look at conditions #3 and #4:

Those 2 conditions, out of 6, are unreasonable; deal-breakers. There are 2 possibilities I can think of:

1) by putting those ill-conceived conditions in, the author of the challenge shows that he has little understanding of how the forex market works and what it takes to be consistently profitable in it over the long term.

or

2) the author of the challenge is slightly more clever than that and does realize that forcing a trade nearly every day and demanding a tight stop are high barriers to success. Therefore he deliberately put those conditions in, to strongly discourage any would-be challengers who might otherwise be interested.

Of course, all this is really moot. The odds that the author of the challenge has anywhere near $1,000,000 burning a hole in his pocket, are slim to none. [/B]

I agree totally with your points. I believe one of the criteria was that the signal alert would come up 1 min before entry. This criteria is either due to the fact that he doesn't really have the 1 million and the challenge is pure BS or that he clearly has zero knowledge about how most trading signals are generated. Many signals come up at the end of the bar, knowing if a signal will be there before the bar is over is obviously impossible in most cases. A lot can change before a bar closes and its important to never show BAD signals.