More pips or more lots?

Hi All,

First let me say I realise I'm probably getting ahead of myself here. This is purely hypothetical and just out of interest.

I've been demo trading my own system now for just about two months. Due to my work schedule I usually trade 2 or 3 nights a week. I'm averaging between 30 and 50 pips a week. I feel that this may go up once I fine tune the system and get more experience but don't expect to average more than 80-100 pips a week. My system aims to pick up small runs of anywhere between 20 and 60 pips per trade usually. I usually make 1, sometimes 2 trades a day. Should all go well and my system continues to bear fruit for the next 4 months demo trading(making a total of 6 months demo) I plan to go live with it. I then plan to just compound all my profits until I have a stake of $20,000. That should take a couple of years! lol

So anyway it got me to thinking. What are peoples thoughts on the best way to then increase profits.

1: Simply continue with the system and trade bigger lots. I do not think I would ever get to a point where I was personally trading enough lots that liquidity would become a problem. Therefore this might be the way to go. However I have heard of all sorts of problems with requotes, slippage etc from "brokers" once you get to be successful and making money, so that could be a consideration.
2: Change the system to attempt to catch a larger number of pips per trade. Learning and developing new ideas and systems is something I plan to do anyway. Should I mess with a system that is proving profitable though, or just keep using it while coming up with another one at the same time?

Thoughts?

Cheers,
PKFFW

if you;ve got an edge - dont change a thing. If it aint broke, dont fix it. Just trade bigger size, bearing in mind your risk exposure to drawdowns.

This is a straightforward one.

If you are consistantly in profit then number of pips within reason is not important. The great thing about forex is it is scalable so you can increase lot size at your discretion.

Don't become distracted by some of the posters on these boards who claim hundreds of pips per week. They have classic boom and bust tendancies. On a decent trending day they sing about 120 pips in the bag and strangely enough on the days when they get whipsawed to hell and give it all back then its very queit.

Stick to your own method with discipline, scale it up and your laughing.

One thing is for sure there will always be another trade opportunity.

PKFFW said:

1: Simply continue with the system and trade bigger lots. I do not think I would ever get to a point where I was personally trading enough lots that liquidity would become a problem. Therefore this might be the way to go.

Thoughts?

Cheers,
PKFFW

Click to expand...

PKFFW , You answer your own question very well here.

Continue with a winning strategy (don't change a thing)



Don't trade more frequently to increase profits, if your strategy is producing good profit results then gradually over time increase the trade size, but keep it so you’re comfortable with each trade. Don't overstress yourself with higher exposure as this will almost always affect your judgment and strategy.





Texas

What you need to avoid is large losses. Even if a system shows it can net make a lot over a time period, if there are relatively large losses at given times along the way it will prevent you from effectively scaling it. Better tohave something less net profitable with small draws that can be scaled up without psychological hangover than a great net profit system that neeeds to ride out some stomach churners along the way.

Once you have all the rules in stone make sure you keep to them. It is harder than you think when there is real money involved and you just suffered a multi-trade draw.

With all due respect, I think asking whether to increase your trade size is premature. You've only been demo trading for 2 months. That is too short of a period to determine your system "stats" like max drawdowm, max losses in a row, etc.

If you decide to trade your system live, keep your position size the same for a year. That way you get a better feel of how your system responds to different market conditions. Yes, you might lose opportunities for big profits but it will also prevent from losing big as well. You never know what's going to happen. It's better to be safe in the beginning and to protect your capital while you're still learning.

If you find your system losing a lot in a certain market condition, you should reduce your position size. Trade only 50% of your original position or even .25%. Remember to always protect your capital.

Well I did say I realise the question was premature. I also said it was purely hypothetical. Lastly I said my intention was to trade the system as is for 2 years whilst building up my account. It was then after 2 years of successful live trading that I would consider increasing lot size.

My reason behind the question was purely on an "interest only" level, to gain peoples insights and ideas on the better path to follow for increasing profits.

Thanks for all the responses. Seems the general consensus is to increase lot size and not fiddle with a profitable system. That backs up my own thinking on what I would intend to do.

Cheers,
PKFFW