10 Pips a Day to Wealth - guaranteed

[KII 10]

Hello fellow traders,

 

I agree with some posts here, by trying to get only 10 pips a trade you are actually limiting your profit potential. Now, im not saying thats the wrong way to approach the markets, its only what I think.

 

This is something we have to deal with as traders, most play very risky when the market is against us (hoping it will reverse) and when in profits, we always try to lock as soon as we have something in our pockets. This approach (I think) in the long run will have negative effects in our balance.

 

Regards,

[Anonymous 11]

WOW. Kinda’ weird to look at a thread for the first time and see yourself quoted in the first post. LOL.

 

The point I was making was that 10 pips/ticks should not be seen as "too small" or not worth the time. Successful traders are not all making 150 pip trades, or three 50 pip trades only per day.

 

I find it kinda’ funny that people always say "...all the money I could of made today if I kept trading". How come nobody says, "..I would of had 5 more losing trades today if I continued..."? The mind sees what it wants to I guess.

 

In truth, I do not like profit targets. I like to surrender to the market, to follow it. I take all it is willing to give me. Profit targets are about what I want, not what the market wants. Along those same lines, I do not like the idea of a "dollar per day" approach. BrownsFan is correct. It does put the emphasis on the WRONG day. Rather than being focused on the days when the market trends beyond expectations (or gives multiple trades with larger than average wins), the days that the market chops becomes more important as you struggle to hit an arbitrary figure of x ticks per day.

 

Again, my point was that if I make a trade and only net 10 pips, I do not want to think "WTF?". I should feel the same as if the trade netted 100 pips. In both situations I planned my trade, surrendered to the market, and traded my plan. These are the true measures of trading success.

[walterw 10]

I have to add my 2 cents here...

 

The market has a norm : Cycle.

 

The market has an exception : Momentum.

 

When you detect the norm "cycle" dont expect great moves... take small profits and dont get greedy.

 

When you detct the exception "momentum" let the runners run... make as much profit posible.

 

Now as momentum its not the norm, you must understand that to make a living on this bussiness you have to program yourself to make everyday a good reasonable not hughe amount of money... If you are after big gains everyday you will most probably overtrade and fail... cheers Walter.

[KII 10]

Hello All,

 

I completely agree with you walter!!!!

 

You need to adapt your strategy according to the market condition not the way around. If the market is ranging use small TP, if the market is trending the use large TP orders (or even trailing stops).

 

Cheers,

[james_gsx 16]

My daily goal is 20 YM points, but if it's clearly a trending day then I will let my winning trades keep going until the tape tells me otherwise. Otherwise I trade until I hit my target and I'm done for the day. I have become pretty disciplined doing this, my reward for leaving after hitting my target on a choppy day = going back to bed

 

I typically have bigger stops than targets, because I have realized that my entry point may not always be 100% correct. If I use a 1:1 risk/reward I get stopped out very fast (since I usually only go for about 10 YM). But if I put a stop around 15 then that gives time for the trade to work itself out. If I get stopped out, no big deal thats life. But this works for me, may not work well for others. I am okay with losing money, I've done it before and I know it's part of the game so that may be why I am comfortable with that ratio. If it starts to backfire and turn against me then I will know I have to reconsider. Behavior modification is key.

 

I like how John Carter sums it up, there are only a few days a month when you're really going to make money. The other days you're just trying to keep your account alive.

[Nick1984 10]

I think Walter is right. On days where price "ping pongs" around and is just being cyclical its best to take small profits when you can.

 

Since I'm only trading one contract at a time at the moment I have to discipline myself to not let my winners run becuse in the past I've let myself go more than 10 points and then see price eventually go back to 10 points and then below it and I'll end up with a scratch trade.

 

What I've learned from this is for noobies to just take their 10 points and paper trade the rest as if they had on 2 or more contracts. Taking that 10 poitns no matter what is the basis of a solid day. Once you have 2 contracts down you can let the 2nd one run and move your stop to break even so that no matter what you take +5.

 

If your putting on average 1-5 trades a day (round trip) then a 20 points gain net is not inconceivable or too hard to earn once you have some solid set ups and are disciplied.

[Reaver 10]

I have to add my 2 cents here...

 

The market has a norm : Cycle.

 

The market has an exception : Momentum.

 

When you detect the norm "cycle" dont expect great moves... take small profits and dont get greedy.

 

When you detct the exception "momentum" let the runners run... make as much profit posible.

 

Now as momentum its not the norm, you must understand that to make a living on this bussiness you have to program yourself to make everyday a good reasonable not hughe amount of money... If you are after big gains everyday you will most probably overtrade and fail... cheers Walter.

 

Well said Walter, you summed up my views on that one as well.

 

I do use profit targets on certain trades, but there is a built in risk reward on them that is very nice. They are longer term and much more rare...the PT's are big and of course overridden when market conditions warrant.

[404 10]

solid thread so far!

[Sparrow 10]

The discussion took off in a bit of a different direction though than intended, it was about making 10 ticks a day and not 10 ticks a trade.

 

10 ticks a trade is difficult because of the spread, comissions and slippage but possible if your setup has a high probability, if not you'll have to grind out a profit.

 

If you are that consistent and add contracts every time you reach a certain amount, it really snowballs. In case you have an almost mechanical system you can take the ego out of the game. A problem might be liquidity, somewhen theoretically you positions would be too big for the market, happens sooner or later depending on the instrument.

 

I think it can be done and a fellow trader told me that he made a fortune by getting 20 ticks for a year every day. Can't say though if he is just a show off.

 

Cheers

[smwinc 20]

The discussion took off in a bit of a different direction though than intended, it was about making 10 ticks a day and not 10 ticks a trade.

 

10 ticks a trade is difficult because of the spread, comissions and slippage

 

Cheers

 

Remember though that if you trade currency futures, you are not dealing with the (ridiculous) spread in the FX cash market.

 

I think the original post asks a key question to intraday traders:

 

"Regardless of your trading strategy, is it more profitable to have a small (relative to ATR or average swings in your market) fixed target in the long run?"

 

I would suggest there is two solutions, one for new traders, one for experienced traders:

 

Experienced Traders:

Analyse your own trading history. Assuming you have a meaniful sample size, do the hard-work and test whether you would be better off quiting each trading day after you reached X dollar or point target.

 

There is NO BETTER trading book out there than your own trading log. You have the luxury of having your own data to analyse. There is really no need to 'what if I did X Y Z' - just test it out?

 

New Traders:

Assuming you're trading your own equity, then use a fixed target, with the expectation of achieveing a reasonable amount of profit, to build your account size to a level where your Risk of Ruin approaches 0.

I.e. Making an assumption that the reality for the majority of new traders is they are suffering from low equity, and need to "Survive their own learning curve" (kudos to Brett for that phrase).

 

HOWEVER, this is the 'catch', or my footnote:

 

Once you make your target, you PAPERtrade the rest of the session.

 

I firmly believe that if you took two brand new traders, both had targets of 1 point in the ES:

Trader A makes his 1 point, and then remains at the computer, and papertraders the rest of the session.

Trader B makes his 1 point, and then switches off the market.

 

All else being equal, I'd back Trader A like my life depended on it.

 

Trading is about being a student of the markets. If you quit class everyday sometimes in the morning, sometimes in the afternoon - do you REALLY think it makes sense you should be as good, let alone better, than the student who is there day in day out until the bell rings?

 

I think this question is good. There was a great quote from a trader who I can't remember the name of, on being a successful trader: "Do what all the other loser's aren't willing to do".

 

'Losers' don't like to be conservative or consistent, don't want to do much work, and need (sadly, it really is a 'need', not always a 'want') to make an abnormal amount of money immediately.

 

I like this concept because of it's 'conservative, consistent' principle.

However, I don't like the option it leaves for doing a whole lot less work.

 

I would prefer to apply the same principles of being conservative and consistent, but at an individual trade level.

 

I had to reiterate what someone else said up above - the market doesn't even know, let alone care, how much money you made/lost on this trade or for the hour/day/week/month.

 

Imposing any kind of limit on functions of your Profit/Loss ONLY makes sense if the reasoning is derived from your OWN trading results.

 

 

SMW

[Sparrow 10]

Great post smwinc, I'd just like to add a few things

 

Remember though that if you trade currency futures, you are not dealing with the (ridiculous) spread in the FX cash market.

 

You're right smwinc, some FX brokers are an exeption though, e.g. MB FX has reasonable spreads. But commissions and spreads take away a high percentage of your profits. E.g. 1 pip commissions + 1 pip spread that's 20% which is a huge amount if you only have 60% positive trades. The market has to move 10 pips in your favor to give you 8 pips of profit, but only a 6 pips move against you will leave you with an 8 pips loss, quite a disadvantage. I have to agree with you that the futures arena is more friendly to scalpers, you'll also get time and sales and volume data there but the FX world offers some opportunities as well.

 

Being able to call it quits for the day after a certain $ amount is reached is dependent on your trading style. If most of your setups are generated on trend days, you'll need to take as much advantage of them as you can. Trading less size after you reach a certain dollar amount to protect your gains can be benefitial, after all the work put into trading should pay off as well.

Days on which you were up a lot and give everything back are very demoralizing.