All language subtitles for 5. $,pips,_R

will go behind that R for you,
right? That will come as you

for reporting profit and loss,
it's probably the most

return the same number of pips
on each of their trades right

100 pips as trader A so they
have a much a reward to risk

why this metric is useful is
because we can now see that

trader B on the other hand they
risk 50 pips to make the same

let's look at each trade that
they took trader A risk 20 pips

and reward. So R removes the
monetary risk and it just

account balance is obviously a
much more useful figure than

make 300 pips so that means you
only make 2% of your account

trade but you win the second so
how many total pips do you

300 pips minus your 20 pip loss
is a really nice 280 pips net

just pips or absolute monetary
amounts. However there are

risk behind that return. So
this is where the fourth

want to lose in the first trade
your price hits your stop loss

which is a £100 loss the second
trade is a winner it has a2-1

the rest of the career. That is
how you achieve longevity in

meaningless statistics. So
we've now looked at the first

10% right because they had a 5
R trade but trader B had to

you just lose the 1% that you
risked which is a 100-pound

was a two R trade. So, R is a
really good metric for a number

important because you know, we
are risk managers at the end of

both return a 100 pit profit
and let's say that this both

you risk 100 pounds on each
trade so let's look at two

because that is how you keep
the numbers on your side for

about what risk you expose
yourself to make that reward

you win the first trade and
price hits your profit target

number as high as possible and
then the monetary amounts that

much more accurate reflection
of that balance between risk

made, it removes those from the
equation because both of those

trading, then, risk management
is all that matters. It's all

they both had 100 pips profit
they both returned 10% on their

bank 100 pips profit so
therefore you have a reward to

you always risk 1% portrayed
right no matter what then the

equates to a 10% profit for
traders on their accounts so at

this industry. So focus on and
build the skill to make your R

the day and if you want to move
into the professional side of

ratio of two toone so there are
is just two so again the reason

focusing on how much money was
made or how much percentage was

different scenarios now in
scenario A you win the first

method, R becomes extremely
useful because it gives us a

although they both returned the
same percentage and they both

Just quoting the total
percentage return on your

risk ratio of 5-1 as 100 pips
is obviously five times as big

of reasons and I think out of
all of the four core methods

their pip count they're really
just shouting about completely

to make 100 pips, so they have
a 5-1 reward to risk ratio and

return on your 10, 000
poundaccount right now in the

again R removes the monetary
risk and it just focuses on the

of pips that you make or the
percentage on your account that

any bearing on the actual risk
that was taken to generate that

that's all R is really it's a
plus 5R return it's your reward

same return of 10% because they
only had an R of two, right? It

to risk ratio but just stated
as a single digit right now

reward to risk because remember
you're risking 150 pips to just

why when someone is talking
about or you know showing off

and that is mainly because it
doesn't fully tell you the risk

account balance trader A
actually risk 2% to make that

risk more than double that they
had to risk five to make that

return on capital so this is
one reason why people you know

banked 100 pounds, which is a
1% returning account but in

you only risk 1% of your
account on each trade that you

that was used to actually
generate that return because if

used to generate those returns
and this is where R comes in so

people will vary their risk
between different trades

can be affected by what lot
size that the trader decided to

profit of 400 pounds, right?
When you compare that to

down minus 50 pips but you made
a net profit of four percent. A

account, it won't tell you the
full story of the reward to

nought. 5% betrayed nought. 25%
betrayed 22% portrayed if some

between different setups and
strategies so in those cases

prove yourself worthy to handle
larger and larger amounts of

pip profit target this means
that if you lose the trade you

focuses on the pip risk to
reward ratio. So rather than

so if you have two traders A
and trader B let's say they

shouting about their profits in
just absolute monetary figures

in the second trade you
obviously make a net 100

still job to just looking at
percentage return on its own

100pound loss in the first
trade from your 200 poundprofit

obviously lose 20 pips but if
you win the trade then you can

scenario B, you made a massive
280 pip net profit and you

that quoting your PNL as a
percentage return on your

pit risk which can be extremely
useful so let me show you why

account balance did you
actually win or lose so

accurately reflects the true
skill of a trader. The amount

and you lose 20 pips you win
the second trade and price hits

the point we don't really know
anything about what risk was

three core methods of reporting
our PNL and we can clearly see

put on so the volume that they
put on their trades right so

information to give us an idea
about the risk that they took

poundprofit, which is a 1% net
return across both trades Now,

trade which is a 5% return now
the second trade was a loss so

actually made a net profit of
400 pounds, which is a 4%

trade but you lose the second
trade so let's calculate how

with this simple formula. So,
it's the total profit that you

pip loss this means that across
the two trades you are now down

what do you notice here between
those two scenarios? Because in

risk 150 pips in order to try
to make 300 pips so this means

scenario B, where you'd made
those 280 pips profit but you

total percentage return will
make sense but some people risk

which is a 200 poundsprofit and
then when you subtract the

your profit target and you bank
a massive 300 pips so therefore

is a better trader or did they
have an equal performance?

profit but how does this
translate into actual money

only returned 100 pounds. So,
what metric do you think more

amount that you risked so you
made a 500 pound profit on this

scenario A, you actually lost
50 pips in total, right? You're

second trade and price hits
your stop loss for a minus 150

risk ratio of 5-1 this means
that you banked five times the

that means you bank 100 pips
right but because you lose a

percentage of the total account
balance which is calculated

first trade minus the 100 loss
on the second means that you

loss so across the two trades
the 500 pound profit on the

second scenario in scenario B
this time you lose the first

their same 10, 000 profit
that's actually only a 1%

stop loss risk so let's say
your account size is 10, 000

remember risk per trade is 1%
of your account size so 100 per

trade so as the first trade is
a winner and it has a reward to

and they both make 10, 000
profit in that week which one

targeted at the uneducated
masses. Secondly, I'm also yet

misleading really so let say
that you take two trades in the

just saying how much money you
made or lost in absolute terms

to report your PNL in why well
because neither of them have

first trade you have a 20 pip
stop loss and you have a 100

to return that 10000 pounds,
right? So, the most common way

visual example to see how this
is just as pointless and

you return. Quite clearly the
percentage right? So this is

who just are trying to attract
attention from the wrong people

often see newbie traders or you
know those scammers use to

right with no other information
just a bit ridiculous in my

opinion probably the most
irrelevant and misleading terms

so you know I saying I lost 500
pounds or $500 whatever the

take so in this case 1% of 10,
000 is 100 pounds so therefore

and you have pretty disciples
and risk management rules so

profit and loss performance on
your trading account or a

because your profit target is
only two times as big as your

refer to their profits in are
just pips but let's take a more

a net total of minus 50 pips
but how much percentage of your

Shouting about daily profits is
usually just a marketing ploy

then well the first trade is a
so you lose 1% of your account

trademark of a rookie or worse,
a scam artist preying on naive

risk ratio now the first two
methods are in my humble

actually have a 1 million pound
account so that means that

to meet a professional trader
who actually refers to their

pound account so this means
that that 10, 000 profit is

the example above of the two
traders trader A has a 50, 000

opinion and you know to be fair
it's only usually done by those

for the wrong reasons now the
second core method that you'll

fixed net profit every day over
a significant time period.

Shouting about your profits and
losses in Pips is often the

I'm yet to meet a single trader
who even close to making a

balance and then you multiply
that figure by 100, which,

trader's true skill set. We
need a little bit more

Forex trader, you will
inevitably come across a social

Firstly, a consistent fixed
daily return is highly

instantly ring in your head if
or whenever you see this.

media page, Facebook
advertisement, YouTube video,

is usually method free to refer
to trading returns as a

returned and then you divide
that by the your total account

that allows them to generate,
you know, X number of pips per

improbable given the nature of
random distribution in

figures, they don't tell you
anything useful about a

as your 20 pip stop loss now in
the second trade this time you

of the 50 grand balance right
but the second trader they

which then gives you the the
figure as a percentage so in

specific trade the first is
probably the simplest which is

actual skill set because let's
say we have two traders right

you have a much smaller reward
to risk ratio of only 2-1

Well, we don't really know
because absolute monetary

many total pips that you make
in this first scenario so as

return so it kind of gives you
zero indication of the traders

then equal to a 20% return
because 10, 000 profit is 20%

second is how many total pips
that you returned the third is

the percentage that you have
returned based on your total

If you have not already done
so, during your journey as a

basically four sort of general
ways that you can quote your

and L in terms of R which
essentially is your reward to

indeed an essential component
of the risk management process.

account balance and the final
method is to calculate your P

or the uneducated now let me
explain why well there are

capital. R is what investors
care about.

probability-based business
models such as trading. Now,

profits in pips. Now, while
measuring pips, yeah, it is

day or X amount of dollars per
week and alarm bells should

article, company, or individual
who claims to have a system