What is the purpose of a macro pip?
It is used to keep you in the scalping mindset when trading large charts; instead of seeing a 40 pip stop you see 4 macro pips & instead of seeing a 20 pip gain you see 2 mp.
If you trade 10x smaller and your target is 10x larger then your gains are equal to that of your small charts.
On a small chart you would typically use a 10 pip stop, but on a large chart you can get that number down to 8, 6, or even 4 mp (remember that gains are equal between large and small charts).
Here are some of the other advantages of preferring large chart scalps over small chart scalps:
1) the breakout is always the worst possible entry so one must use what Joe Ross coined as the 'traders trick' entry; all that this means is that you must be in profit at the BO price and not pip later.
On a small chart you need to create space between the trigger and the extreme, use a limit order, and then pray that your spread is small enough so that you get filled before price moves without you.
On a large chart you can lazily use the 'traders trick' & the spread...
2) ...the spread, even a 5 pip spread is only half an mp. Gains are the same but spreads/fees/costs/slippage have less of an impact.
3) Volatility is greatly reduced. Price gaps 60 pips against you? No problem, that is only 6 mp! Again, 6 pips & 6 macro pips have the same value because you are trading 10x smaller.
4) Higher probability trades. Price spikes, widening spreads, whipsaw...those are all small chart problems.
You can scalp with a small chart until you get a series of losses @ which point you must catch a 'home run' trade; they all know this, but a lot of these traders would have you believe that a series of small wins will pay for these losing trades.
5) 'Zero Wait' entries: instead of waiting for 5 trades on a small chart you can place 5 simultaneous trades spread over 5 different pairs.
Think of all the time that you spend waiting for an entry & all the time waiting for an exit & all the time waiting for your next entry and exit
There is no waiting, when scalping a large chart, not in front of the screen anyway.
You can take the same number of trades & receive the same account gains as a small chart.
6) Space Wars pays for this strategy:
Lets say that you start at $0.10 pips and work your way up to $2.40 pushing that buy-buy-buy button like the good lil lad that you are. Now every pip that you gain above your %target will give you 8 mp @ $0.30 pip. How? 2.40/0.30 = 8, every pip is multiplied by 8.
7) This strategy pays for Space Wars
The list of reasons why the MACRO PIP is superior to the MICRO PIP are seemingly endless.
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