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20-40% performance fee (with high watermark) for Forex traders

Marco Pearlo Encarnacion
pearlo (pearlo)
Sep 01 2011 at 06:16
127 Beiträge

NextLevelForex posted:
<b>Pips Expectancy</b> = ( Average Pips Win * Winning Trades % + Average Pips Loss * Losing Trades % ) <b> / 100</b>
    = 17.71 * 222 / 309 - 28.20 * 87 / 309 (used the average pip loss with the negative value, as it is, here)
 ~= 12.72 - 7.94
    = <b>4.78</b>


using the given formula i think it should be

Pips Expectancy = (17.71*222/309 + -28.20*87/309) / 100
  = (12.72 - 7.94) / 100
  = 4.78 /100
  = 0.0478

where did the <b> / 100</b> go? or did i miss something in the calculation? please correct me if im wrong. thanks.

NextLevelForex (NextLevelForex)
Sep 01 2011 at 06:23
262 Beiträge
I expressed the percentage for winning/losing trades as 0.xx already, so there is no need to divide that by 100.
Specifically, I said the winning trades % is 222 / 309, which is about 0.72. You can also express that as 72 / 100.

So if you are going to use the % as usual (for example, use a value of 72 for 72%), then dividing by 100 is necessary.
But if you are using the mathematical value, as Will (0.72) or I (222/309) did, then dividing by 100 should be skipped.

He who thinks he can, and he who thinks he cannot, are both right. ~ Henry Ford
Chikot
Sep 01 2011 at 06:24
2299 Beiträge
anyone is sleeping here? 😲

Marco Pearlo Encarnacion
pearlo (pearlo)
Sep 01 2011 at 06:45
127 Beiträge

NextLevelForex posted:
    I expressed the percentage for winning/losing trades as 0.xx already, so there is no need to divide that by 100.
Specifically, I said the winning trades % is 222 / 309, which is about 0.72. You can also express that as 72 / 100.

So if you are going to use the % as usual (for example, use a value of 72 for 72%), then dividing by 100 is necessary.
But if you are using the mathematical value, as Will (0.72) or I (222/309) did, then dividing by 100 should be skipped.


thank you Remus for explaining.

NextLevelForex posted:
If Pips Expectancy is too low, let's say 2 pips, then any extra slippage and/or commission I could incur in my account, versus your 'master' account, could have significant negative effects to the performance I'll get.


What Pips Expectancy do consider as good? 5 and above? or as long as it wont fall from 2pips?

NextLevelForex (NextLevelForex)
Sep 01 2011 at 15:31
262 Beiträge
A quick note regarding this suggestion I made:
https://www.myfxbook.com/community/suggestion-box/show-expectancy-pips-along-one/161504,1

The support team pointed out to me that the formula I provided for calculating the pips expectancy can be simplified a lot, as shown below:

<b>Expectancy in Pips</b>
= Average Pips Win * Winning Trades % + Average Pips Loss * Losing Trades %
= (TotalPipsWon / WonTradeCount) * (WonTradeCount / TotalTradeCount) +
  (TotalPipsLost / LostTradeCount) * (LostTradeCount / TotalTradeCount)
= TotalPipsWon / TotalTradeCount + TotalPipsLost / TotalTradeCount
= (TotalPipsWon + TotalPipsLost) / TotalTradeCount
= <b>TotalPips / TotalTradeCount</b>

He who thinks he can, and he who thinks he cannot, are both right. ~ Henry Ford
NextLevelForex (NextLevelForex)
Sep 01 2011 at 15:50
262 Beiträge
pearlo posted:
What Pips Expectancy do consider as good? 5 and above? or as long as it wont fall from 2pips?


That's a personal preference. I consider an average of 2 pips per trade to be the very minimum, just for the simple fact that I'm mostly using ECN accounts, which charge you commissions to execute the trades; so if you make an average of 1 pip per trade, and pay the broker 0.8 pips, how profitable do you think you can you get when you add up the other costs of doing business?

The lower the Pips Expectancy it is, the higher the chances that you'll get a high deviation from the 'expected' performance. Even 2 pips is low, and I'll use an EA that is making waves right now, with its astonishing returns (thousands of %):
https://www.myfxbook.com/members/milliondpips/million-dollar-pips/114107

That EA has a Pips Expectancy (as of now) of 1.86, which to me indicates a very high chance you'll get different results (and most likely worse) than the 'official' account. If you read through the tread of that EA, you'll see how people are trying to get various VPS/broker configurations, but still most of them ending up with losses. So basically the system is great, but you cannot get that performance in your account. 😄

Also, even more important than the Pips Expectancy is the Expectancy Ratio, at least for me. The higher that number, the better the trading method. I suggest you try to calculate the 2 formulas on trading systems for which you can find more than 100 trades. Then search for more than one account trading the same system. You'll see that, in general, the systems having repeatable, consistent results, are the ones with higher Pips Expectancy and higher Expectancy Ratio.

He who thinks he can, and he who thinks he cannot, are both right. ~ Henry Ford
Marco Pearlo Encarnacion
pearlo (pearlo)
Sep 01 2011 at 23:41
127 Beiträge

NextLevelForex posted:
    A quick note regarding this suggestion I made:
https://www.myfxbook.com/community/suggestion-box/show-expectancy-pips-along-one/161504,1

The support team pointed out to me that the formula I provided for calculating the pips expectancy can be simplified a lot, as shown below:

<b>Expectancy in Pips</b>
= Average Pips Win * Winning Trades % + Average Pips Loss * Losing Trades %
= (TotalPipsWon / WonTradeCount) * (WonTradeCount / TotalTradeCount) +
  (TotalPipsLost / LostTradeCount) * (LostTradeCount / TotalTradeCount)
= TotalPipsWon / TotalTradeCount + TotalPipsLost / TotalTradeCount
= (TotalPipsWon + TotalPipsLost) / TotalTradeCount
= <b>TotalPips / TotalTradeCount</b>



Nice. now it is easier to calculate.

NextLevelForex posted:

That's a personal preference. I consider an average of 2 pips per trade to be the very minimum, just for the simple fact that I'm mostly using ECN accounts, which charge you commissions to execute the trades; so if you make an average of 1 pip per trade, and pay the broker 0.8 pips, how profitable do you think you can you get when you add up the other costs of doing business?


Thanks for your explanations. Pips Expectancy and Expectancy Ratio are indeed very useful. Good luck in finding good systems and good managers.

FXTopGunTrading (FXTopGunTrading)
Sep 02 2011 at 22:31
12 Beiträge
Hi Remus Miclea

My name is Ben Williams.

Trade Style: Swing Trading/Short Term Trend Trader (5 to 10 days or less)

Trading Forex Since Jan 2005 with not much success until recently, after many many hours (a few years) of finally perfecting a short term trading method based on a very advance moving average cross-over system. Below is the post link to my trade acct.

Trades Per Month: Typically between 25 and 55 trades per month

Max Trade Duration: There's no max trade duration as a set/fixed amount of time (but one can be applied if need be). The method continuously tells me if a trade is valid or has become an invalid trade. In 5 yrs of backtesting no trade has remained open longer than 20 trading days (not counting the weekend). The system is constantly being monitor by me, data is being updated on an hourly bases while a trade is open.

Average Trade Duration: 16hrs to 72hrs

Pip Expectancy: 40.43 (if my calculation is correct)
Expectancy Ratio: 5.60

This trade method is a robust system which can be traded in any kind of market, ranging or trending with a built in feature that tells me when conditions are clear for taking a particular trade set-up. The method attempts to capture 100 pips per trade as long as the trade remains valid.

Best Regards,
Ben Williams

https://www.myfxbook.com/members/FXTopGunTrading/fxtopguntrading/143610

There's no greater power than the North Star : Live Free or Die Trying
SaltyWaters
Sep 03 2011 at 05:44
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SaltyWaters
Sep 03 2011 at 06:07
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