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waveslider

Daily P&L targets

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Hello Dr. - welcome to the board.

 

I wonder what your experience is with clients using a set daily profit and loss targets.

 

I believe it is good for a trader to quit trading once they have reached a certain losing point on the day, to avoid a downward spiral -revenge trade scenario.

 

However, I have not formulated an opinion on profit goals.

 

My profit goal for the market I trade (YM) is approximately 1/3 the daily range. Today I pulled out 78 pt., a good day -more than double my normal target. But as I was sitting up 32 pts. on the day I was considering calling it quits. In this case that would have been a mistake.

 

I would appreciate your professional opinion, Thanks.

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Interesting question really, one i have been grappling w/ for the last few weeks myself. I trade by setting a daily profit goal, and do very well by it.

it is slow and predictable, you could say boring almost. My problem is when, in the past i decided to "trade all day".. i usually end up losing, maybe much like you said, revenge trading who knows. In the past, i thought alot of "% of daily range".. and it is viable, but for me i was not comfortable with it. For me, i view it as a performance measure. The problem with daily target goals as i experiance.. you never get to step out of the box, which is why i started my thread " higher level" to see/read others experiances. In the end, i guess.. it is every trader for himself.. what is comfortable for you may not be for me. maybe that is why they say people trade their belief's etc,etc...

be interesting to see some replies on this, as i have read other thread's,sites, debate the ole profit target/no profit target threads and they tend to get lively! Take care!

 

Knyyt

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Guest cooter
Hello Dr. - welcome to the board.

 

I wonder what your experience is with clients using a set daily profit and loss targets.

 

I believe it is good for a trader to quit trading once they have reached a certain losing point on the day, to avoid a downward spiral -revenge trade scenario.

 

However, I have not formulated an opinion on profit goals.

 

My profit goal for the market I trade (YM) is approximately 1/3 the daily range. Today I pulled out 78 pt., a good day -more than double my normal target. But as I was sitting up 32 pts. on the day I was considering calling it quits. In this case that would have been a mistake.

 

I would appreciate your professional opinion, Thanks.

 

Waveslider,

 

You and the good doctor may be interesting in the following thread which also discusses this topic.

 

http://www.traderslaboratory.com/forums/f37/trading-size-1704.html#post10375

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Thanks for the welcome, everyone! Part of a trading plan- a critical part- is to have profit goals. They may be daily, weekly, monthly, etc. You set these goals based on your business. Trading is a business and is treated like a business. Everyone is different in what he or she needs to make in order to live at this or that lifestyle. If you make your profits for the day, then stop trading. It is not a mistake to take profits if you have made your target. It is a kind of self-delusion to look and say "I could have made more" or "It was a mistake to take the profits and go when there was so much more there to take." Some days, you will be blessed by the markets to receive more than your goal. Be grateful for that and do not tempt the markets. Many traders do really well in the morning, get a bit euphoric and keep trading ( even when they have made their daily goal) and give it all back in the afternoon. This might not happen every day, but it happens a lot. Trading success is a marathon, not a sprint. Making money is highly rewarding and tends to reinforce dopamine pathways which lead to wanting to make more money. This can lead to overtrading, overleveraging, taking more risk, etc. The most important thing is to have a plan for what you need to make, and stay with that plan. If you are ready to go to "higher levels" you need another plan with well defined parameters. There is a lot more to say about this, but bottom line, everyone has different needs and wants. Also, remember that the markets will humble everyone, so it is best to stay out of hubris and in gratitude. I will not bore you with homilies about pigs getting slaughtered. You all know that. Greed is good, but it must be tempered with a sound trading plan and trading discipline.

 

Thanks!

Doctor Janice

The Trading Doctor

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Moving this from Trading Psychology to this thread: A question about the qualities of superior traders. Here is the post:

 

Thank you, Cooter! I would rank discipline right up there with personal responsbility. Disicpline includes the ability to stick to a plan and not be hijacked by too many destructive emotions. It includes the most important aspect of capital preservation which is cutting losses. This implies that the trader is not so biased and fixated on a certain belief system. He or she is very flexible and is able to cut losses when the position goes sour. So many traders do not have this ability, as you are well aware. The inability to admit mistakes and cut losses coupled with the common practice of taking profits too soon ( cutting winners and letting losers run) is part and parcel of trading discipline. Also, I will discuss later other aspects of capital preservation, since capital is not just financial. Capital is your energy-- financial, mental, emotional, physical, and spiritual. Drawdowns drain each of these types of capital.

 

Thanks!

 

Doctor Janice

janice@thetradingdoctor.com

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Doc : I have a question here...

 

On my experience so far, having time objectives has helped me a lot, now something that maybe from a RRR or money management point of view may be questioned, for leaving sometimes money on the table, but MY mind gets relaxed when I go for a very small daily or weekly target.... reeeeaaaally easy to get there... I live happy without pressure from myself and the nice thing I get there ¡¡¡ what would be your professional perspective on this issue...?

 

When I had very high goals in terms of weekly yields, I was intimidated by the pressure... now on low expectatives I am been constant on my performance.... expect your feedback.... thanks Walter.

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Hi Walter,

 

If you have a system and a plan that works for you, and you are happy with it, then stick with it. Everyone is different in the way that he or she thinks about trading and life. Keeping it simple is great. Sleeping well and taking time to relax is part of maintaining physical and psychological capital. Good for you! Keep going!

 

Thanks!

Doctor Janice

The Trading Doctor

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Dr Janice : it is very encouraging to hear that... I am some times questioning myself why I dont take more profits... but on the other hand I feel good with what I am making, and it is a lot in comparison to any regular income... thanks for your response, cheers Walter.

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