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flaw in charts - we need pips growth not equity vote results

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flaw in charts - we need pips growth not equity Discussion

simon (ubernova)
Sep 24 2009 at 09:43
16 posts
ive noticed a great many of the accounts on myfxbook are demo accounts, testing strategies and robots and there overall performance.

any true trader would not be too concerned with equity growth, why? example:~ a scalper robot that uses large lot sizes can easily grab $100 for a 1 pip scalp trade, it is widely known that scalpers have a very, very, very high risk/reward ratio, one loosing trade can blow all the winning trades for the past week or more in one fale swoop, not good trading practice and very poor money management. second example, my own testing account, i'm actually -800 pips from account opening, but im in profit, why? high risk scalping to recover the account, this demonstrates why we all need the charts modified.

we have 2 charts outlaying balance and growth, both based purely on profit/equity and effectiviely show the same information. what should be present instead is one charting account equity growth and the second charting pip growth, this is the only way one can fully determine the efficiency and stablility of a manual strategy/automated trading robot.

this way, when we look at a traders performance chart, we can see not just the equity growth in percentage but also the pip growth in comparision to equity percentage, if both are following the same direction then your doing well , if your in profit but are still lossing pips( due to lot sizes) then that line will be going in the opposite direction. if we see big dippers(drawdown) in the chart we know your scalping with wide stoplosses or trade with poor money management i.e no stoploss and close the trade manually after you finally except defeat, your secret's out to public scrutiny lol.

but on a serious note, this is what i'd be more interested in, as we all often use differing lot sizes which capture varying amounts of profit/losses, equity growth is really a very poor representation of the true growth of your account, please change the equity growth chart to pip growth or have equity balance + equity growth + pip growth for a fuller picture.

this of course could mean tweaking your systems page coding, as the true pips v. balance should equate to who's doing the best, on the systems page we see accounts with +600%m but with 50% drawdown, high risk! but what would be better is that the systems page works out which account has the most pips+balance for that month, we'll know the pip value too.

he who dares shall win
Ethan (Staff)
Sep 24 2009 at 10:18
1392 posts
Thank you for the suggestion and the detailed explanation.

We would like to see what others think about your suggestion.

bizWiz
Sep 24 2009 at 12:12
397 posts
i would rather see daily pips, then a growth of pips..as the growth will follow the balance and equity chart so there's really no point seeing the same graphs over and over again.

but maybe they can add both?

Sleep is for the weak.
kennyhubbard (compuforexpamm)
Sep 26 2009 at 06:44
265 posts
I disagree.......I believe there is no correlation between equity growth and pips growth that proves(or disproves) sensible trading. Many systems use variable lotsizes based on probablilty and any time you have various lotsizes, you are going to have disparity between equity and pips.....in fact the bigger this disparity, the better your money management!

The best chart will be one that shows balance vs free equity(ie balance - drawdown - margin). I can tell everything I need to know from a system by looking at such a chart. The chart needs to be drawn on a time basis rather than a trade by trade basis as this will show you how far into the red a trade(s) will have gone.

In terms of the high risk scalping, this will be another whole discussion but I use such system because they work and given the high win rate, I can afford the wide stoplosses. It requires a mind set change from the old traditional way of trading with tight stops, running with the trend, fancy risk risk/reward ratios, etc, etc.

Wealth Creation Through Technology
Stephanus Rensburg (stephanusR)
Oct 07 2009 at 09:36
216 posts
It is an excellent suggestion, many who push fraudulent systems wouldn't want it though.

simon (ubernova)
Oct 07 2009 at 12:01
16 posts
in response to 'StephanusR' , this was my main reasoning behind my suggestion. If we look at many EA's performance on myfxbook, we can immediately notice that an EA's cares little about money management, with many with drawbacks as much as 50%, no genuine trader would touch such systems with a barge pole. also you'll notice that EA's care more for lot sizing, multiplying risk with so many trades, again very bad trading method in the long run, these systems will rake in the profits and in one trade will swallow all that profit too.

hence why i suggested pip growth instead, consistent pip growth along side equity growth using predominately the same lot sizing will clearly identify a true, solid and long-term profitable trading strategy. i think in the long run, websites such as myfxbook will hands down prove that EA's dont work and more importantly cannot cognify 'long-term', 'longlevity' or 'trading career' lol.

dont get me wrong, i have tried several EA's, all have failed on me, eventually, then it hit me, start learning, apply that knowledge, take a few discipline & patients pills and and win, win, win.


he who dares shall win
kennyhubbard (compuforexpamm)
Oct 07 2009 at 14:28
265 posts
ubernova,

If you are referring to martigale type strategies, then we may be in agreement. I look at these types of strategies with suspicious interest. I wouldn't throw them out the window but I haven't found one I trust sufficiently to trade live with.

That said, if your idea of good money management is fixed lot sizes then you have more to learn than what you think.

Many EA's use good, solid and more sophisticated money management than you could do as a manual trader, and there is nothing fraudulent about that.

I find it interesting that you say EA's don't work........I use only EA's to trade and I am making money(yeah, yeah stephanus, I know, I have open trades and some drawdown............heaven forbid!). If you look at the top performers in the systems(live accounts), it would appear to me that more than half are automated systems.

Perhaps the problem is not that EA's don't work, but rather people under-estimate the amount of time, effort, dedication and knowledge it takes to use them profitably. For me, it has been over a year now and there are still many things I do not understand.

At the end of the day, before you say that I am using a fraudulent system, you can have a look......my system is raking in the pips, so I stand by my statement that you cannot tell anything about my system and my money management by looking at a pips curve.

Wealth Creation Through Technology
macdoug
Oct 15 2009 at 01:57
21 posts
I like the idea of showing pips growth but not at the exclusion of equity growth. Equity is compounded by increasing lot size with the account growth and is therefore more important than pips alone

Hugh (johanesh)
Oct 15 2009 at 12:48
7 posts
We need to see both (PIPS and Equity). PIPS growth is an indicator measurement of our trading strategy. Equity is a measurement of our wealth. :-)

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