MightyOne wrote:

Let us say that you are used to trading 2 mini lots, but you suffered a massive draw down and are now trading 1 mini lot:

Which is more easy:

A. $1 per pip with a 15 SL & targeting 5+ pips

or

B. $0.10 per pip with a 15 SL targeting 150 pips w/ 10 attempts to do so?

A: 10 trades mostly losers (60%): -$90 in losses + :

A1: 5 pips per trade?: -$90 in losses + $20 in profit = -$70 total

A2: 10 pips per trade?: -$90 in losses + $40 in profit = -$50 total

A2: 20 pips per trade?: -$90 in losses + $80 in profit = -$10 total

A2: 40 pips per trade?: -$90 in losses + $160 in profit = $70 total

(aha! PROFIT!)

or

B: 10 trades mostly losers (60%): -$9 in losses + $60 in profit = $51 total

What if my win % were 90%?

A: 40 pips per trade: $360 in profit - $15 in losses = $345 total

B: 150 pips per trade at 1/10: $135 - $1.50 = $133.50

But lets compare maximum daily loss of 10 trades:

A: -$150

B: -$15

And now subtract that from the total:

$345 - $150 = $195

$133.50 - $15 = $118.50 // getting closer! Off by $76.50!

Twice?:

$195 - $150 = $45! // profits are evaporating

$118.50 - $15 = $103.50! // Profits are holding steady

I've been looking at this for a couple hours now. It all makes sense up until:

"150 pips per trade at 1/10: $135 - $1.50 = $133.50"

This statement is assuming that you make 10 trades in a day, at $0.1 per pip, with a target of 150 pips for each trade, 90% win rate, 10% lose rate, stop loss is 15 pips.

What this math is really saying is that each trade makes 150 pips and that you do that 9 times out of 10 in a day. That's 1350 pips total for the day. This seems unlikely.

I have attached my Excel spreadsheet where you can play with the numbers. The numbers A1-A5, B1-B2, are just like in the examples from MightyOne and all input parameters are exactly the same as from MightyOne's A1-A5, B1-B2 so you can follow along.

I think it would be more correct if you put a "1" for number of trades for the last entry B2.

With the idea being:

Trade: Pip Profit:

1 -15

2 +18.4

3 +18.4

4 +18.4

5 +18.4

6 +18.4

7 +18.4

8 +18.4

9 +18.4

10 +18.4

Total 10 trades, total pips 150

Does this make sense to anyone else or did I miss something?