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pips vs profit
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Author:  eRIKb81 [ Mon Mar 04, 2019 11:10 pm ]
Post subject:  pips vs profit
Hi there,

I've got something to say and I hope I don't get bashed for it, I really do appreciate this forum and all of the hard work that has been done here. So I'll post it here on the noob forum, I don't want to contaminate other threads.

It's about the pips/points used as measurement for profit, and with that, the use of it in some code (and a lot of EA's, not just from this forum). Correct me if i'm wrong, but aren't pips a bad way to measure profit? The value of a pip depends on the exchange rate, so a pip from the GBP/NZD (1.93 at the moment) is worth about half of a pip from EUR/GBP (0.86 atm).

So a better way to measure would be the price of a pip. Following the example of investopedia (https://www.investopedia.com/ask/answer ... cypair.asp) the EUR/USD would be 1pip * exchange rate ( *100000)= 8.84.

A small table to demonstrate the differences:

Code: Select all

pair     pip multiplier rate     value
EUR/USD  0.0001         1.13     8.85
GBP/NZD  0.0001         1.93     5.18
EUR/GBP  0.0001         0.86     11.63
USD/JPY  0.01           111.73   8.95
NZD/JPY  0.01           76.24    13.12
In code for grids for example, I don't think one should use pips, but something like a percentage of the exchange rate.
We want to risk/add with a percentage of our buying power or equity, not with pips.

This does not matter much with something like the 100k pips challenge, with fixed position size, as long as your account is big enough, but it does matter when trading with a real equity. When you have 10k equity, you could trade twice as big on GBP/NZD compared to NZD/JPY.

Any thoughts? Am i wrong?
Author:  SteveHopwood [ Mon Mar 04, 2019 11:49 pm ]
Post subject:  pips vs profit
Forget about points.

Forget about EA's and their targets in other forums. We really do not care about them. They are mostly bollocks and lack even the most basic of safety precautions automatically included here. Only a lunatic trades live with them.

To answer your question, yes: merely being concerned with pips does not necessarily mean that closing at x pips profit will mean a financial gain.

Those of us basket trading SPB and Desky will be familiar with these scenarios:
  • A basket is in negative pips but positive cash.
  • A basket is in positive pips but negative cash.
For me, cash trumps pips any day but:
  • My SPB 500 pips test is 15% in profit.
  • My SPB 10,000 pips test is over 40% in profit.
  • My SPB 100,000 pips test is heading towards the stratosphere but with little realised profit yet.
Nothing trumps cash but loads and loads of positive pipes will ultimately lead to cash profits.

Up to you what you decide to do. I suggest you go with what the experts do here.

:xm: :rocket:
Author:  eRIKb81 [ Tue Mar 05, 2019 12:48 am ]
Post subject:  pips vs profit
Yes, I agree with that, SPB is an amazing thing and the pips are great.

But my point is: I think you could increase real cash profits by not just trading pips, but the value of pips. Take increased risk on cheap pairs, reduce risk on expensive ones. It will not increase the amount of pips you win, but it should increase the amount of real currency you'll get out of it. I'll make an effort to convert a standard SPB3 tomorrow, and trade it besides the standard one, i'm not sure how, but I'll do it.

And on a side-note:
I think you (the forum and you) are adapting to the way institutional traders work, follow the strength/trend/interest rates (Baluda's SS) and work out the resistances/supports (Peaky). Add to winning trades (Grid trading), hedge losing trades (I don't use that); and baskets, they spread your risk.

I did notice a Grid option just now, it creates grid trades based on an ATR, that does fix the part of the grid distance, but not the position sizing.
Author:  billv [ Tue Mar 05, 2019 11:13 am ]
Post subject:  pips vs profit
eRIKb81 ยป Tue Mar 05, 2019 11:48 am wrote:Yes, I agree with that, SPB is an amazing thing and the pips are great.
I did notice a Grid option just now, it creates grid trades based on an ATR, that does fix the part of the grid distance, but not the position sizing.
Does lot size based on pip value solve your problem?
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