Why PIPS COUNT IS SO IMPORTANT?
1. No Pip, No Profit (as simple as that)
2. Lot Allocation as the other alternative. Besides pips count, Traders use lot allocation to maximise the return per pip count
3. Pips count reflect Trader's ability to read a market well. A trader's skill is measured by his ability to "read" the market conditions and turn every opportunity into pips gain, thus increase his pips count.
4. One way out. When trader has limited ability to capture as much pips as possible given a period of time, he is left with the only option, that is to increase risk/lot allocation to maximize his returns and thus putting his portfolio/investors into greater risk.
5. Poor ability to read market conditions = Poor Trade execution. Since his ability to read the market conditions is limited, so is his "judgement" in every possible trade made. Thus higher probability of executing bad trades.
6. Bad Trades = Higher DD. Thus we often see that Traders with low pips count tend to have higher DD.
Conclusion - Pips count is one of the best criteria to measure one's trading ability. It highlight the trader's good market judgement to turning every possible trade into wining pips without having to rely extensively on higher lot allocation to boost overall gain. Once you know the pips count of the trader. The rest is as easy as multiplication, i.e. mulitiply your lot size according to your risk appetite. (eg. 0.01, 0.1 or 1 std lot size).