20 pips a day is all you need! See what I mean..

[shakespeare515]

One of the most valuable things that an online forex trading course can show you is how valuable 20 pips a day is..

1 standard lot at 20 pips/day = $200/day = $50k/year
2 standard lots 20 pips/day = $400/day =$100k/year
3 standard lots 20 pips/day = $600/day = $150k/year
5 standard lots 20 pips/day = $1000/day =$250k/year
10 standard lots 20 pips/day = $2000/day = $500k/year

If you were obeying 2% risk management, then you can multiply your account about 5 times a year.. at 4% risk management, you can multiply your account roughly 10 times /year. To demonstrate..

If you have a $10k trading account and you are trading at a 2% risk, then you can risk $200 per trade (2% of 10k = 200). that means you can trade 1 lot with a 20 pip stop and 20 pip target (1:1 risk reward, least acceptable).
If you can make 20 pips/day on avg with that 1 lot you will make 200/day=1000/wk=50k/year..

So, you just made a $50k/year income with just a $10k account!! only risking 2%. Most traders dont appreciate the leverage we get, and risk way too much, only blowing their accounts before they know what went wrong!

At a less conservative 4% risk management level, you could risk $400 per $10k. Using the same 20 pip model, we would trade 2 lots with 20 pip stop and target. 20 pips/day would now equal $400/day=$2000/week=$100k/year. So, a $100k income was achieved with a $10k account, using the same 20 pips/day strategy.

What's important is that we never need to try for more pips/day, thats too difficult and novice forex traders have a hard time realizing this. It is more beneficial to be consistent at a small number of daily pips and then gradually increase your lot size as your account grows.

btw, this is NOT compounding, this is taking your profits out every week. If you were to leave the money in your account and increase your lot size according to your account balance you would see astronomical gains.

 

[shakespeare515]

Should also say this is for day traders and scalpers

 

[4xpipcounter]

Another way to look at it is that it's 44% compounded interest per month at 10% margin management, which is 795% per year.

One of the most valuable things that an online forex trading course can show you is how valuable 20 pips a day is..

1 standard lot at 20 pips/day = $200/day = $50k/year
2 standard lots 20 pips/day = $400/day =$100k/year
3 standard lots 20 pips/day = $600/day = $150k/year
5 standard lots 20 pips/day = $1000/day =$250k/year
10 standard lots 20 pips/day = $2000/day = $500k/year

If you were obeying 2% risk management, then you can multiply your account about 5 times a year.. at 4% risk management, you can multiply your account roughly 10 times /year. To demonstrate..

If you have a $10k trading account and you are trading at a 2% risk, then you can risk $200 per trade (2% of 10k = 200). that means you can trade 1 lot with a 20 pip stop and 20 pip target (1:1 risk reward, least acceptable).
If you can make 20 pips/day on avg with that 1 lot you will make 200/day=1000/wk=50k/year..

So, you just made a $50k/year income with just a $10k account!! only risking 2%. Most traders dont appreciate the leverage we get, and risk way too much, only blowing their accounts before they know what went wrong!

At a less conservative 4% risk management level, you could risk $400 per $10k. Using the same 20 pip model, we would trade 2 lots with 20 pip stop and target. 20 pips/day would now equal $400/day=$2000/week=$100k/year. So, a $100k income was achieved with a $10k account, using the same 20 pips/day strategy.

What's important is that we never need to try for more pips/day, thats too difficult and novice forex traders have a hard time realizing this. It is more beneficial to be consistent at a small number of daily pips and then gradually increase your lot size as your account grows.

btw, this is NOT compounding, this is taking your profits out every week. If you were to leave the money in your account and increase your lot size according to your account balance you would see astronomical gains.

 

[lbranjord]

Yeah, I think it's possible to average 20 pips a day or more, but it's not healthy to set a gold standard for the day.

Either way, you've shown the power of MM! Which should be the first thing people learn. Charts are charts. When you're proficient you'll likely acheive 50-60% accuracy and without Money Management, why bother...

 

[4xpipcounter]

Let me give an ironic twist that hardly no one considers. First we agree that strict MM principles are important. With total adhereance to that, let me give an example of something that is overlooked.
As traders, we all go through dry times. Let's say someone loses 20% of the account. They need to gain 25% to get back to where they were originally. Simple math--You start at $10, then drop to $8-- that is 20% loss. Afterwards, your gains take you back to 10, which would be 25% of 8. Just for that example you have to win 25-20, just to break even, which is 56% of the time. My repudiation is not meant as obstinance, but if you are winning 50% of the time, then you are really losing. If you are winning 60% of the time, you are winning, but barely. That is still good, because it still puts that trader in the upper echelons of all traders, because 90% of all accounts bankrupt.

Yeah, I think it's possible to average 20 pips a day or more, but it's not healthy to set a gold standard for the day.

Either way, you've shown the power of MM! Which should be the first thing people learn. Charts are charts. When you're proficient you'll likely acheive 50-60% accuracy and without Money Management, why bother...

 

[4xpipcounter]

One thing I forgot to mention, but I agree whole-heartedly with you about not setting a gold standard. My goals are to gain better mental and emotional strength, so I can be of a proper trading mind. I also feel I can always improve and refine my methodology, even though it is totally independent of any peripheral intervention.
If I do those things, then the pips have always been there. I can tell you the overall average for me is greater than 20 pips per day, but that does not matter. If I made 20 pips per week, I would still consider myself a success.

Let me give an ironic twist that hardly no one considers. First we agree that strict MM principles are important. With total adhereance to that, let me give an example of something that is overlooked.
As traders, we all go through dry times. Let's say someone loses 20% of the account. They need to gain 25% to get back to where they were originally. Simple math--You start at $10, then drop to $8-- that is 20% loss. Afterwards, your gains take you back to 10, which would be 25% of 8. Just for that example you have to win 25-20, just to break even, which is 56% of the time. My repudiation is not meant as obstinance, but if you are winning 50% of the time, then you are really losing. If you are winning 60% of the time, you are winning, but barely. That is still good, because it still puts that trader in the upper echelons of all traders, because 90% of all accounts bankrupt.

 

[lbranjord]

Let me give an ironic twist that hardly no one considers. First we agree that strict MM principles are important. With total adhereance to that, let me give an example of something that is overlooked.
As traders, we all go through dry times. Let's say someone loses 20% of the account. They need to gain 25% to get back to where they were originally. Simple math--You start at $10, then drop to $8-- that is 20% loss. Afterwards, your gains take you back to 10, which would be 25% of 8. Just for that example you have to win 25-20, just to break even, which is 56% of the time. My repudiation is not meant as obstinance, but if you are winning 50% of the time, then you are really losing. If you are winning 60% of the time, you are winning, but barely. That is still good, because it still puts that trader in the upper echelons of all traders, because 90% of all accounts bankrupt.

Right. I guess I was ASSUMING (which is never a good thing to do) that the wins would be larger than the losses.

If they are even, say 20 pip stop, 20 pip target, then I agree with you 100%.

 

[lbranjord]

One thing I forgot to mention, but I agree whole-heartedly with you about not setting a gold standard. My goals are to gain better mental and emotional strength, so I can be of a proper trading mind. I also feel I can always improve and refine my methodology, even though it is totally independent of any peripheral intervention.
If I do those things, then the pips have always been there. I can tell you the overall average for me is greater than 20 pips per day, but that does not matter. If I made 20 pips per week, I would still consider myself a success.

I haven't averaged out my pips because Oanda bases your account history on price, what a bummer because I'd like to know. I do know that I usually trade at about 45-60% strike rate, with bigger winners.

It feels good to lose, when you reach that point that it doesn't make you second guess yourself. It's like taking a weak punch, knowing you're about to knock that fool out!

 

[4xpipcounter]

Yopu got that right! My emotions never change with a losing trade or a huge winning trade. I say, "Big deal!" It's just part of the job.

With regards to your other post, if you have a 20-pip stop and a 20-pip limit, and you are consistently winning 50% of the time, then it probably means the margin is not changing, which means that is the break even point.

My reference was more the dollar amount. I don't use stops, which means it could never be a reference point with me.

I haven't averaged out my pips because Oanda bases your account history on price, what a bummer because I'd like to know. I do know that I usually trade at about 45-60% strike rate, with bigger winners.

It feels good to lose, when you reach that point that it doesn't make you second guess yourself. It's like taking a weak punch, knowing you're about to knock that fool out!

 

[gamma]

The problem with aiming for 20 pips a day is, it does not give you a very good win ratio.
if you want a basic 1:2 win ratio you need to have a stop loss at 10 points and unless you have near perfect entries every time, you will be blown out of your trade by very quickly, by whipsaws.And then the issue that 4xpipcounter mentioned comes into play.
you need to aim for at least a 1:2 win with a decent stop loss.
I aim for a 1:3 win ratio and my stop loss amount varies, to a maximum of 40 points, and only place 1 trade a day,This makes the actual trade worthwhile and you can cope with the losing ones, which we will always have. I did well all week until today when I took a loss hence turned off the charts and have spent the rest of the day on T2W as its raining outside.

 

[scose-no-doubt]

Do you close out at 1:3 target gamma?

 

[Lord Flasheart]

Lots of good posts, BUT,all of that is providing you can maintain 100 discipline without stake variation. Rather than say ive lost 20% now I have to get 25% back,why not say Ive lost 20 pips so now I need to get 20 pips back,its then even money. If I want to risk £1000(say 2%) on a trade, i dont have £50,000 in my account. Id be stupid to do that.id probably have £5000 in the account. Supposing I make a mistake or press the wrong button etc,etc.

 

[gamma]

Do you close out at 1:3 target gamma?

Once it reaches my target then I use a very tight trailing take profit of 10 points, and to be honest, the ocassions where it goes another 20 points are rare. Its not usual for the main 4 pairs to go up more than 50-70 points before pulling back a bit. Those 100/200 points breakouts normally occur during before and after news is out. I am out of my trades if news is out in the next 2 hours.

 

[4xpipcounter]

The thing is there will always be a cumulative gain even if it is one pip per week. I think the problem is in aiming or setting goals that this is how much I am going to get. My goal is to find my setup and enter accordingly.
My philosophy is also a little different from yours, Gamma. I get a losing trade, I just keep going while looking for the next setup. We are all diffeent along those lines. I have a high risk tolerance and 100% confident in my method I use to trade with. I know if I get a losing trade, odds are it will be awhile before I see my next one. About 80% of mine are winners.
This is why I think all of us have to trade according to our mental and emotional set.

The problem with aiming for 20 pips a day is, it does not give you a very good win ratio.
if you want a basic 1:2 win ratio you need to have a stop loss at 10 points and unless you have near perfect entries every time, you will be blown out of your trade by very quickly, by whipsaws.And then the issue that 4xpipcounter mentioned comes into play.
you need to aim for at least a 1:2 win with a decent stop loss.
I aim for a 1:3 win ratio and my stop loss amount varies, to a maximum of 40 points, and only place 1 trade a day,This makes the actual trade worthwhile and you can cope with the losing ones, which we will always have. I did well all week until today when I took a loss hence turned off the charts and have spent the rest of the day on T2W as its raining outside.

 

[gamma]

Lots of good posts, BUT,all of that is providing you can maintain 100 discipline without stake variation. Rather than say ive lost 20% now I have to get 25% back,why not say Ive lost 20 pips so now I need to get 20 pips back,its then even money. If I want to risk £1000(say 2%) on a trade, i dont have £50,000 in my account. Id be stupid to do that.id probably have £5000 in the account. Supposing I make a mistake or press the wrong button etc,etc.

"The revenge trade" is one of the most difficult ones to master!
I also have a micro account and if I lose a trade will switch to the micro account
It should be mandatory that all all traders should have a micro account for the "revenge trade" its uncanny how often the revenge trade goes wrong. But it does teach you at a reasonable cost the folly of the "revenge trade"

 

[Chartsy]

i've got far better when my win percent fell to 30-40%

 

[lbranjord]

i've got far better when my win percent fell to 30-40%

Good work. I admire that level of trading 'maturity' and hope to reach it at some point.

I would have a lot of math to do to tweak my method and I don't like to try and fix something that already works. But lowering my strike rate in order to increase profit is a definite goal I've for myself in the coming years.

 

[4xpipcounter]

Bottom line is if you are trading and getting consistent gains, then you have reached that "trading maturity level". You are trading within your comfort zone just like I am in mine. Everyone's comfort zone is different. I enjoy reading these threads because I enjoy learning about people's different comfort zones. In essence, I learn a lot. In keeping an open mind to all traders has enabled me also to grow.
As an example I have four components in my trading methodology. The staple in my methodology is the ichimoku. In 2005, I said I would never trade with it. I became further exposed to it in 2007 in a chat in my personal room that I had. I began studying it, demo trading with it, and it eventually became a cornerstone in my trading repetoire.
It was in that same era I was talking to someone about mathematical methods to derive S&R's. Our discussion continued into the area of currency's medians, means, and ranges. Something clicked. I came up with a formula, that is proprietary that figures S&R's for the day, week, and month. Ironically, this guy was searching for the ultimate panacea to make him rich, and it never worked. Keeping an open mind enabled me to come with the most passionate find of my methodology.
Someone else in the room set me a piece of software that automatically plots my S&R's on the chart. His friend devised it .
I guess these are just examples of learning and earning. When I'm in the learning mode, assume I know nothing. When I'm in the learning mode, I will be the Samurai.

 

[lbranjord]

Bottom line is if you are trading and getting consistent gains, then you have reached that "trading maturity level". You are trading within your comfort zone just like I am in mine. Everyone's comfort zone is different. I enjoy reading these threads because I enjoy learning about people's different comfort zones. In essence, I learn a lot. In keeping an open mind to all traders has enabled me also to grow.
As an example I have four components in my trading methodology. The staple in my methodology is the ichimoku. In 2005, I said I would never trade with it. I became further exposed to it in 2007 in a chat in my personal room that I had. I began studying it, demo trading with it, and it eventually became a cornerstone in my trading repetoire.
It was in that same era I was talking to someone about mathematical methods to derive S&R's. Our discussion continued into the area of currency's medians, means, and ranges. Something clicked. I came up with a formula, that is proprietary that figures S&R's for the day, week, and month. Ironically, this guy was searching for the ultimate panacea to make him rich, and it never worked. Keeping an open mind enabled me to come with the most passionate find of my methodology.
Someone else in the room set me a piece of software that automatically plots my S&R's on the chart. His friend devised it .
I guess these are just examples of learning and earning. When I'm in the learning mode, assume I know nothing. When I'm in the learning mode, I will be the Samurai.

Yeah, I had to try everything once. Then I knew for myself whether it would work for me and I don't need to try it. I reached a point where I had no indicators or systems to switch to so I picked the chart setup that made the most sense to me and a system that gave an edge, about as sharp as a butter knife. Now I just take my miniscule slice once or twice a day and wait it out. All the excitement is gone, but so too is the frustration.

 

[gamma]

Yeah, I had to try everything once. Then I knew for myself whether it would work for me and I don't need to try it. I reached a point where I had no indicators or systems to switch to so I picked the chart setup that made the most sense to me and a system that gave an edge, about as sharp as a butter knife. Now I just take my miniscule slice once or twice a day and wait it out. All the excitement is gone, but so too is the frustration.

Now I just take my miniscule slice once or twice a day and wait it out. All the excitement is gone, but so too is the frustration.

That says it all
this is the defination of a consistant good trader