Which is easier - a steady 500 pips a month or just 20? - page 7
You are missing trading opportunities:
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
Registration
Log in
You agree to website policy and terms of use
If you do not have an account, please register
In order to compare two systems it is necessary to do all this in points, plus one of parameters to equate.
Example compare two systems.
1. Profit 50 pips drawdown 50 pips.
2. Profit 20 points drawdown 20 points.
There is no comparison possible. You cannot choose the unambiguously better system; one parameter should be equated.
The comparison is possible. The second system is clearly better, because it has a smaller standard deviation, which means a lower risk.
It's not about the zigzag. The point is that working with bars we a priori deprive ourselves of building a system that has perfect entries (after entering the market, not one pip in the loss). After all, when we take closes of bars we essentially take a tick, and the mathematics is the same as for bars, RSI , etc. It works on bars, as well as here on the tick-flow. Only the drawdown is different.
Bars or ticks are just different levels of discreteness of information flow. Naturally, ticks carry more information than hourly bars. However, not the fact that more information is good, all indicators are an attempt to filter the available information, i.e. to reduce it.
Bars are time-bound - good or bad, the question is not clear. Ticks provide additional information about the trading activity level, it is probably good. In any case, it is better to use the one you know how to use.
A comparison is possible. The second system is clearly better, as it has a smaller standard deviation and therefore a lower level of risk.
If we talk about risks without reference to the absolute value of the deposit, the problem includes a relative value, and it is the same for the first and second TS. Therefore the risks are identical. If time is included into the task, then the second system is more preferable as the time of position holding is proportional to the square of the distance in points to stop orders and for equal time intervals (for example a week) the second TS chops up (5/2)^2= 6 times more points than the first one.
So 20/20 is better than 50/50 pips.
Bars or ticks are just different levels of discreteness of information flow. Naturally, ticks carry more information than hourly bars. However, it is not a fact that more information is good, all indicators are an attempt to filter the available information, i.e. to reduce it.
Bars are time-bound - good or bad, the question is not clear. Ticks provide additional information about the trading activity level, it is probably good. In any case, the optimum tool is the one you know how to use.
Here I agree with Prival that the usefulness of ticks is obvious.
In any case, their analysis can be abandoned in favour of, for example, hourly bars. But one cannot do vice versa! Therefore, the ticks are an absolute good.
If we talk about risks without reference to the absolute value of the deposit, the problem includes the relative value, and in this formulation it is the same for the first and second TS. Therefore, the risks are the same.
What does the deposit size have to do with it? Where is the greater risk: to lose 50 points or to lose 20 points?
Greater gains are not an absolute good. Larger profit variation is also a risk, because it implies greater uncertainty. Expectation of both systems is the same, but the first system must be able to earn more to provide the equality.
Here I agree with Prival that the usefulness of ticks is obvious.
In any case, their analysis can be abandoned in favour of, for example, hourly bars. But one cannot do the contrary! Therefore, ticks are an absolute good.
The benefit of ticks is obvious only if you can use this information, to filter the noise. Tics may be a benefit, but they are by no means an absolute one. As in many situations, using them can bring more new problems than they solved old ones. Especially if they are ticks from DCs that have little to do with real market information.
I read a glorious article: the guys were analysing the possibility of forex arbitrage, which was previously thought impossible (based on numerous studies). But they did an analysis on a tick date with ask and bid prices from Reuters. The conclusion is that enough arbitrage opportunities were found, taking into account all the overheads and enough time to have time to make trades. Previous studies were on a date with a 10 minute discreteness and these arbitrage opportunities were not detected.
This month's trade is a "no trade this month and wait for next month", is there anything to be gained here? After all Warren Buffet himself seems to stick to similar strategy (not to enter more than three times a year)?
All this is self-deception. But actually you have to take pauses in your work. You can exclude Mondays and Fridays for entry.
What does the size of the deposit have to do with it? Where is the greater risk: losing 50 pips or losing 20 pips?
Greater profits are not an absolute good. Greater profit variation is also a risk, because it increases the level of uncertainty. Expectancy of both systems is the same, but the first system must be able to earn more to provide this equality, it is a payment for greater risk.
Yes timbo, I agree with you.
50/50 gives more risk.
When we say that it is easier to earn 500 pips per month or 20 pips per month, we should add - with the same percentage depo drawdown, and we should clarify with the same number of transactions. Let us assume that the number of transactions is equal to, say, 10. To ensure equal percentage drawdown of both systems, we need to trade with the volume of lots inversely proportional to its percentage drawdown. I.e. 20/500=1/25.
Now let's compare the two systems.
The first one. Trading TP = 50, SL = 50, Lot = 1(size is taken on the basis of the allowed percentage drawdown of the deposit).
The second one. TP=2, SL=2, Lot=25(size is calculated based on the allowable percentage margin call).
So, which system seems easier to develop? If we take into account that the ratio of profitable trades to losing trades must be the same for both systems to provide the same profitability in the reporting month, here we understand profitability in percentage ratio to the deposit.
I think the answer is obvious. The first one.
The size of TP and SL should be selected based on the current market situation, as well as the characteristics of a particular trading strategy. There is a certain, optimum size in pips to the target, at a given time. If the target is too close, the overhead is also too high (who likes to pay 50-90% of honestly earned money to some guy, besides, the market analysis is very complicated). On the other hand, too far - does not make practical sense, because it requires an unacceptable amount of time.
The required returns can also be obtained by increasing the number of entries. Here there are also artificial and natural limitations. Trading too often will not be allowed, too seldom - it will not be possible to obtain the necessary profitability. I consider as optimal 5 - 10 operations per day.
Conclusion: 500 points a month is more realistic than 20 points.
TOTAL: 5...15 full transactions per day, 25...250 pips in each transaction, (depending on instrument, and on the good day, J), 20*(25...250)=500...5000 pips per month, about 0.8% return on deposit in each operation, at 0.6% risk of deposit, about 4% per day, 90...120% of deposit per month. These are my objectives in building my Expert Advisor systems. It is not worth bothering with less. IMHO.
P.S."One hundred and twenty-five thousand pips a month" should not be the goal of a sensible trader, as it is not optimal from any point of view.
P.P.S. So far I managed to increase my deposit only four times during a year. There is a lot of work to be done ...
When we say that it is easier to earn 500 pips per month or 20 pips per month, we should add - with the same percentage depo drawdown, and we should clarify with the same number of transactions. Let us assume that the number of transactions is equal to, say, 10. To ensure equal percentage drawdown of both systems, we need to trade with the volume of lots inversely proportional to its percentage drawdown. I.e. 20/500=1/25.
Now let's compare the two systems.
The first one. Trading TP = 50, SL = 50,Lot = 1(size is taken on the basis of the allowed percentage drawdown of the deposit).
The second one. TP=2, SL=2,Lot=25(size is calculated based on the allowable percentage margin call).
So, which system seems easier to develop? If we take into account that the ratio of profitable trades to losing trades must be the same for both systems to provide the same profitability in the reporting month, here we understand profitability in percentage ratio to the deposit.
I think the answer is obvious. One.
The size of TP and SL should be selected based on the current market situation, as well as the characteristics of a particular trading strategy. There is a certain, optimum size in pips to the target, at a given time. If the target is too close, the overhead is also too high (who likes to pay 50-90% of honestly earned money to some guy, besides, the market analysis is very complicated). On the other hand, too far - does not make practical sense, because it requires an unacceptable amount of time.
The required returns can also be obtained by increasing the number of entries. Here there are also artificial and natural limitations. Trading too often will not be allowed, too seldom - it will not be possible to obtain the necessary profitability. I consider as optimal 5 - 10 operations per day.
Conclusion: 500 points a month is more realistic than 20 points.
TOTAL: 5...15 full transactions per day, 25...250 pips in each transaction, (depending on instrument, and on the good day, J), 20*(25...250)=500...5000 pips per month, about 0.8% return on deposit in each operation, at 0.6% risk of deposit, about 4% per day, 90...120% of deposit per month. These are my objectives in building my Expert Advisor systems. It is not worth bothering with less. IMHO.
P.S."One hundred and twenty-five thousand pips a month" should not be the goal of a sensible trader, as it is not optimal from any point of view.
P.P.S. So far I have only managed to increase my deposit by four times within a year. There is a lot of work to be done ...
That's exactly what I was talking about. Blah-blah without looking at the deposit is idiocy.