Pips don't pay rent, and the unit trap

[Shadow Trader]

Scalpers talk in pips. "Made twelve pips this morning." The currency of the conversation hides the actual money, and that creates a psychological disconnect.

A trader who sees +8 pips feels good. If the position was a tenth of a lot, that's eight dollars. At ten lots, it's eight hundred. The same pips can be trivial or life-altering, and the emotional response follows the number on the screen, not the size of the account.

This matters most when position size changes. A trader who increases lot size after a streak keeps thinking in pips while the money risked quietly multiplies. A normal stop-out now costs a big chunk of the account, and the reaction is out of proportion to the pip count.

Another effect appears with spreads and commissions. Counting pips gross of costs inflates results. A net figure, converted to currency and divided by risk, tells the real story.

Journals that log both pips and money, plus the risk in money terms, reduce the confusion. Looking at results in terms of R multiples, the multiple of initial risk, puts everything on one scale.

Which unit gets used for review, and has that ever hidden a problem?