Calculated Pips Continued

It seems like the subject of how best to quantify a winning or losing trade is a hot topic.  There were a couple of differing opinions.

Two people agreed on the following example
If you buy 2 lots at the same time and you sold the first lot for a 10 pip profit and the second lot for a 5 pip profit, you could report a profit of 7.5 pips.  Pip Heaven believes this way works because we are interested in trading performance, not the exact amount of money you made.

Chad thinks that the best way to standardize performance regardless of account type is to report a profit to loss ratio.  His example explains why.   If a trader with a mini-account (10K) profits 30 pips on 10 lots, he can say he is +300 pips.  If a trader trading with the same risk but 1 standard lot (100K) profits 30 pips, he can only say he is +30 pips.  Both the mini-trader and the standard account trader profited the same amount of money, $300. 

Chad's example makes a lot of sense and clearly points to the faults in my pip calculation.  Though this is the case, I had standardized this way of calculating my performance therefore on a month to month basis, it still worked in telling me whether I did better or worse than other months.  So regardless of whether your method is believed to be right or wrong, if you are consistent in how you calculate performance, the results from any method should still tell you what you want to know.

Overall, most people agreed that using percentages are the best solution including Simon, Ed Mamula, Hermann, and molbio1.

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