How Many Pips Per Month Is A Great Result? - page 9
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even ten pips a month can be enough.
Hi jamespolis,
If I can help you a little bit then that is not the correct question you asked.
The amount of pips one makes is of no importance.
It is the amount of pip one makes devided by the risk he took that is important. Or better known as reward/risk ratio.
I gonna try to explain myself with 2 extreem examples. Extreems have the tendency to picture it better.
Lets say that someone makes an average of 1000pips per month (again it is an extreem example) but he has on a regular base in between drawdowns of 500 pips. That means that his reward is 2 x the risk he is exposed to.
That means he will need to place his value per pip in such a way that if he looses 500pips that he does not burn his account.
An other guy makes makes daily ONLY 5 pip and never has any losses ( again also here impossible but only as an extreem example).
That means that he only makes +/-100 pips in a month but he does not have any draw down. But that also means he does not have any risk what so ever.
That means he can boost up his value per pip to the absolute maximum. Every day he can trade with everything he owns in his life.
The guys who makes only 100pips in a month is going to make a lot more money then the guy who makes 1000pips per month because he needs to take in account that he can also have temporary drawdowns of 500pips.
To answer your question or try to help you is that you always need to look what the risk (drawdown) is of a praticular system in relation to the profits (reward) it makes. And most amateurs fail on this. They only look to the profits a system makes and place their leverage and value/pip in such a way that this would make them rich in no time. But the moment they face a bad period or serious draw down they burn half or compleet their accounts.
If you find yourself a system with a reward/rsik ratio between 2 and 5 over a longer period of trading (normally R/R ratio are calculated on a 3 year period) then you found yourself a good system.
That means if you trade of a 10.000$ account and if you have a system that has a R/R of 5 that you will need to place leverage and value per pip in such a way that if you loos or have a drawdown that you don't loos more then 25% of your account. That means that your end result at the end of the year will be 5 x as bigg as the risk that you took. That means 25 X 5 = 125% profit. That is extreemly good.
You will find some people who say or show these kind of results over a 1 month period. But ask them to show these results over a whole year and they will faill completely in doing so. Because they are way over-leveraged and the moment they encounter a bad period their account is burned.
Systems or people who claim that they would have a R/R ratio over 1 year period of 10 do not exist and I can only sujest to stay away from them. They are only theoretical and based on over-optimized back test.
friendly regards...iGoRyeah, but is there any fool proof way to determine what the max DD will be? Even if you backtest 1000 trades there is no guarantee that you are not looking at your system with rosy glasses.
yeah, but is there any fool proof way to determine what the max DD will be? Even if you backtest 1000 trades there is no guarantee that you are not looking at your system with rosy glasses.
I guess the closest you'll get is to do some basic resampling of historical results and then calculate confidence intervals. .
I would like to get some indication of many pips per month generated is a great result? I am not concerned with lot size but would like to get a rough idea of what amount of pips per month would be average, great and outstanding...I would appreciate any guidance. Thanks James
It very much depends what kind of lifestyle or living status you have now.
Or how much you are money you are making now per month (including all income sources).
For a person who earn $10,000 per month, if forex gives him only $1000 per month, then it is really bad for him.
For a person who earn only $500 per monht, if forex gives him $1000 per month, then it is outstanding for him.
This question is relative to your current income/wealth level.
Just my opinion :-)
Best measures of risk-adjusted returns?
I've been trading fx (as a serious side business) for about 5 years, but still I learn something with every trade. Given the leverage available in spot forex trading, understanding the risk-adjusted returns of any trading approach are very important. What risk/reward measures do the experienced traders out there use?
I've built an Excel workbook that calculates Sharpe Ratio, Sortino Ratio, and Omega based on my trading history. This spreadsheet uses the Kelly formula to tell me the gearing ratio I should be using in my account going forward. I have also taped my max drawdown % to the front cover of my trading diary, to remind me to always set stops!
Are there good benchmarks for Sharpe Ratio, etc in forex trading? The Sharpe ratio for my forex trading (~2.4) is higher than it is for the trading I do in stocks (0.7), probably because in fx trading, I only take obvious setups, and my holding time is shorter. But I've also read several academic papers that have found evidence of excess returns from trading in fx, while supposedly there isn't similar evidence for technical stock trading (after you back out dividends and transaction costs).
Your thoughts on measuring risk/reward in your trading would be welcome.
... What risk/reward measures do the experienced traders out there use?
...
Your thoughts on measuring risk/reward in your trading would be welcome.Hi oblomov,
Sharpe is not usually used in forex. Because Sharpe Ratio is not telling us about how profitable the system. It is telling us about stability of the income (same with bank percentage which is same all rthe time for example). For example, some EA did 0.1% for the 1st month, 0.1% for the second month and 0.1% for the 3rd month. Sharpe Ratio will be very hight. Because it is stable income every month.
Other EA did 1% return for the 1st month, -2% return for the second month and 5% for the 3rd month. Sharpe Ratio will be low.
Some people are using the following to estimate the risk:
min/max number of trades, min/max simultanious lot size value, max floating drawdown, how many pairs are traded, abnd how long time (1 month , 1 year) with trading results provided, and some information about the system: with stop loss value, without stop loss value. And, of course, any backtesting results can not be the proof of anything anywhere in forex. Forward testing/trading only.
The 2nd poster pretty much summed it all up.
Always remember that the forex market comprises several exchanges; hence, always keeps this in your mind before creating a forex trading system routine as, here there are lots of differences between the forex market and other markets. Also, if you are new to the forex market and has been trading only in the stock market, you may not be wishing to get caught through any mistakes.
300+ pips is consider to be good per month. It's more than enough to live enough. Well...depending on your account size.
I only make a daily target about 10-15pips with my fbs account. So 200-300 pips monthly
I believed with that daily target, make more easy to get. I do the same
10 pips a day for my fbs.