Yep, he's absolutely right. But again, you have to define what "early" is on a relative scale. Being off a few hundred pips or so using a daily or weekly chart is nothing. If you look at where we are on AU now from the absolute daily lows, it's a very minor blip on a very big downtrend from the overall high near 1.11.
If a 5 minute chart went against you 10 or 15 pips before it turned in your direction and made you money, you probably wouldn't think much of it. But if you apply the same relative relationship to a daily or weekly or even a monthly chart, people freak out because they're focused on only the number of pips, which is actually totally irrelevant. Pips don't make you money...percentages make you money...or lose money for that matter.
Trade 10,000 units of AU in any given direction and lose 100 pips and you lose $100. Then, take another AU trade at 100,000 units in any given direction and gain 20 pips and you win $200.
So you're $100 to the good in profit but you're pip count is negative 80 pips. So the number of pips have nothing to do with it. If I score big on USD/DKK, the number of pips gained for the day looks impressive but on a relative scale, you have to divide the pip count by 5 to get a more realistic view.
And what if instead of 2% entries I were to use only 0.02% entries on my trades? That would basically be 2 cents per 100 dollars instead of 2 dollars per hundred dollars risked on each trade. Man, I could rack up many thousands of pips playing pairs all over the place but the percentage gained with each win would be very little so it would take tons more pips to amount to anything.
And what if I were to tell you that I average $1000 a day in profits from trading? Would you be impressed? If so, why? Because if you don't know what size account I'm trading with, you can't get a percentage comparison. If I'm making $1000 a day on a $100,000 account, that's 1% a day and that's pretty good. But if I make only $1000 a day on a 10 million dollar account balance, then I'm making only 0.01% a day and that pretty much stinks on a percentage basis. So even the dollar amount means nothing.
Going in too big and adding too close together without accounting for the time frame adjustment is what kills traders....not how many pips early you get in on the trade. Everything boils down to percentages, not pips or even dollars.
