Daily Profit Goals/Downsides

[sdoma 10]

I'm wondering if any of you use daily profit goals or downsides when you trade. For example, are you done after you lose $500, or take in $1000?

 

Also, what do you consider profitable?

[nakachalet 10]

I'm wondering if any of you use daily profit goals or downsides when you trade. For example, are you done after you lose $500, or take in $1000?

 

Also, what do you consider profitable?

 

profit target should depend entirely on capital at risk.

 

if a a trader invests 5k usd in a trading acct, would it be reasonable to expect a 10% return each trading session (500 usd).... would it or won't it be a reasonable expectation?

 

for those new to trading, it would be utterly illogical and impractical to expect such a high return.

 

however, in the hand of an experienced trader, the answer would be much more inconclusive. it is much more likely that the experienced trader could accomplish such feat, perhaps not consistently, but it is not entirely impossible.

 

on the flip side, for new traders to lose more than 2% per session is almost catastrophic in terms of recovery. everyone knows less than 10% of those trading are profitable.

 

so if you are not sure yet, go slow and go very slowly.... nowadays there are many brokerage companies who offer free trial, some with live signal, for those new to trading to practise....

 

for what it is worth..... if you are not already experienced in trading.... stay completely away from trading currencies.... in spite of many ads enticing many to seek the quick profit.... do not even go near it.... it will eat you up alive....

 

in taking profit, a trader should only follow his/her own trading plan.... if your sound and well thought out trading plan dictates whatever amount.... that is the only way that you should trade.... if any portion of your trading does not work out after several sessions.... modify your plans to accommodate your new discovery....

 

however, never change your trading plan in the middle of your trade.... more succinctly.... never allow your elusive emotions to interfere with your trading.... K? wishing everyone another profitable session today.... :applaud:

[Tams 20]

I'm wondering if any of you use daily profit goals or downsides when you trade. For example, are you done after you lose $500, or take in $1000?

 

Also, what do you consider profitable?

 

worst thing you can do

[Tams 20]

I'm wondering if any of you use daily profit goals or downsides when you trade. For example, are you done after you lose $500, or take in $1000?

 

Also, what do you consider profitable?

 

the market is dynamic

 

take what the market can give you

[zdo 20]

Using ‘Daily’ profit goals and risks is indicative of ‘trading syschology’ issues. The issue will likely be further compounded because those limits are usually significantly out of line with the way one’s particular system should be played.

 

Per trade profit goals and risks are TOTALLY system dependent. It can’t be generalized. Some systems are best traded dynamically, “taking what the mkt gives you” as Tams says. Others have best results with targets.

Know your system. Test and know your odds. You don’t have to play your odds with extreme accuracy, just keep it in bounds… just like every tennis winning shot doesn’t have to be exactly on the line… hth

[Predictor 11]

You should factor into how much you have of your account at risk. Yes, it does also make sense to use daily stop losses. But they could, also, be based on account risk and not your own feeling to that regard.

 

In general, with a tiny account, risk should be reduced at the 25% of account level. It also makes sense to stop when ahead if you can't trade overnight because you have less time remaining to recover from any losses but only in terms of closed trades.

.

These types of considerations are a bit advanced in that focusing on them can be counterproductive for the beginner but are nonetheless important.

 

It is worthwhile to consider:

 

How much time is left in the game (early game, mid game, late game) (i.e day)

% of capital at risk total

closed trade profits

open trade profits

-----

 

Now, let's say you are a momentum trader and you are up $250 on a $1,000 account (like I was today) and you have a total of around $500 at risk. In this case, you have 25% at risk to break even and so you should start reducing your risk.

 

Many successful traders just trade the open and morning session. I also do better with morning session. Trading late in day has many pitfalls, namely, limited time to recover and more fakeouts. It also depends on your style. You shouldn't set an upper limit per se but you should watch your total account risk and set a lower limit.

 

If you aren't trading a hard system then it likewise makes sense to listen to yourself when you are losing and take time off, whether that be a day or a week. Most professional gamblers will step away when losing. Push harder when winning and take it easy when losing.

 

A quantitative example might be that overbought indicators tend to get stuck when market trends strongly. Maybe it is a profitable indicator for you, if you can manage to avoid the bad losses, i.e don't keep fighting when it quits working!

 

I'm wondering if any of you use daily profit goals or downsides when you trade. For example, are you done after you lose $500, or take in $1000?

 

Also, what do you consider profitable?

Edited July 13, 2011 by Predictor

[nakachalet 10]

You should factor into how much you have of your account at risk. Yes, it does also make sense to use daily stop losses. But they could, also, be based on account risk and not your own feeling to that regard.

 

In general, with a tiny account, risk should be reduced at the 25% of account level. It also makes sense to stop when ahead if you can't trade overnight because you have less time remaining to recover from any losses but only in terms of closed trades.

.

These types of considerations are a bit advanced in that focusing on them can be counterproductive for the beginner but are nonetheless important.

 

It is worthwhile to consider:

 

How much time is left in the game (early game, mid game, late game) (i.e day)

% of capital at risk total

closed trade profits

open trade profits

-----

 

Now, let's say you are a momentum trader and you are up $250 on a $1,000 account (like I was today) and you have a total of around $500 at risk. In this case, you have 25% at risk to break even and so you should start reducing your risk.

 

Many successful traders just trade the open and morning session. I also do better with morning session. Trading late in day has many pitfalls, namely, limited time to recover and more fakeouts. It also depends on your style. You shouldn't set an upper limit per se but you should watch your total account risk and set a lower limit.

 

If you aren't trading a hard system then it likewise makes sense to listen to yourself when you are losing and take time off, whether that be a day or a week. Most professional gamblers will step away when losing. Push harder when winning and take it easy when losing.

 

A quantitative example might be that overbought indicators tend to get stuck when market trends strongly. Maybe it is a profitable indicator for you, if you can manage to avoid the bad losses, i.e don't keep fighting when it quits working!

 

may i pls ask a few questions in reference to your post....?

 

1--Now, let's say you are a momentum trader and you are up $250 on a $1,000 account (like I was today)

 

excuse me, would you be kind enough to explain just which trader or trading group that would trade on a 1k $ acct....?

 

and if the trader is fortunate enough to see his trading acct increased by 250$ or 25% in just one session.... would not immediately protect that profit....?

 

i hope you are not selling dreams.... to dreamers.... here, are you....?

 

2--Now, let's say you are a momentum trader and you are up $250 on a $1,000 account (like I was today) and you have a total of around $500 at risk.

 

again, it annoys me excruciatingly to hear and see supposedly experienced traders coming out in print stating irresponsible statements such as what you just claimed here that.... you have a total of around 500$ at risk....

 

which traders in their right frame of mind.... would risk 500$ out of their trading acct of 1,000$.... in any one single trade....

 

excuse me, my friendly trader.... there is no experienced trader who would trade in any market or in any commodity and/or under any circumstances.... and would put out 50% (500 out of 1k) of his entire capital at risk in any one single trading session....

 

i do hope that there were some typo errors some where....

 

3-Many successful traders just trade the open and morning session. I also do better with morning session. Trading late in day has many pitfalls, namely, limited time to recover and more fakeouts.

 

there is just no statistical evidence to support your assumption here either that morning session is more productive or whatever.... it is all heresy to say the least....

 

it is however true that most seasoned and profitable traders would avoid the opening and closing minutes.... because either or both of those sessions are very erratic and abnormal in the eyes of many experienced traders....

 

just for your information.... the specialists at the pits will be willing to take your orders and fill them up just as expeditiously regardless of the trading hours.... try it....

 

pls kindly do not regard this as a personal attack, ok? it is just my poor reaction to something that is contrary to profitable trading assumptions and practices.... that's all.... ok? wishing you and everyone another profitable trading session.... :helloooo:

[Predictor 11]

This is all based on my own trading. Yes, I trade at NADEX and have $1,000 in it now. I'm trading a $3,000 model account though. It was me who had the $250-$260 today and ended losing $260! It was not a good feeling. You can for sure open a 1k account (or a 3k account) and trade with good leverage. All risk is predefined unlike futures.

 

Everything is based on my experience. I tend to trade the open because I lose more in the evening. One thing is that the NADEX contracts expire. A lot of people who trade futures also don't have margin for overnight exposure. If you enter a trade at 2:00 PM then you only have 1 hour for it to work. If it goes immediately against you then there isn't time for it to recover. Futures market is @ 1315 right now. If my contract had not expired, I'd be break even.

 

I can tell you learning to trade the morning session is the most profitable period for me. Trading the open is how professionals make their living, see Bella. The morning session is NOT the same as just any other time in the market.

 

To make a meaningful return from a tiny account, you can't use the same rules that would be used in a larger account. 2% of 3000 is $60. That's a trivial amount. Risking about 8% to 10% per trade is required and reasonable (it was 8% loss of my account but 25% of the margin I have in the account). Of course, this is very difficult. Only trade with capital you can afford to lose.

 

 

 

 

may i pls ask a few questions in reference to your post....?

 

1--Now, let's say you are a momentum trader and you are up $250 on a $1,000 account (like I was today)

 

excuse me, would you be kind enough to explain just which trader or trading group that would trade on a 1k $ acct....?

 

and if the trader is fortunate enough to see his trading acct increased by 250$ or 25% in just one session.... would not immediately protect that profit....?

 

i hope you are not selling dreams.... to dreamers.... here, are you....?

 

2--Now, let's say you are a momentum trader and you are up $250 on a $1,000 account (like I was today) and you have a total of around $500 at risk.

 

again, it annoys me excruciatingly to hear and see supposedly experienced traders coming out in print stating irresponsible statements such as what you just claimed here that.... you have a total of around 500$ at risk....

 

which traders in their right frame of mind.... would risk 500$ out of their trading acct of 1,000$.... in any one single trade....

 

excuse me, my friendly trader.... there is no experienced trader who would trade in any market or in any commodity and/or under any circumstances.... and would put out 50% (500 out of 1k) of his entire capital at risk in any one single trading session....

 

i do hope that there were some typo errors some where....

 

3-Many successful traders just trade the open and morning session. I also do better with morning session. Trading late in day has many pitfalls, namely, limited time to recover and more fakeouts.

 

there is just no statistical evidence to support your assumption here either that morning session is more productive or whatever.... it is all heresy to say the least....

 

it is however true that most seasoned and profitable traders would avoid the opening and closing minutes.... because either or both of those sessions are very erratic and abnormal in the eyes of many experienced traders....

 

just for your information.... the specialists at the pits will be willing to take your orders and fill them up just as expeditiously regardless of the trading hours.... try it....

 

pls kindly do not regard this as a personal attack, ok? it is just my poor reaction to something that is contrary to profitable trading assumptions and practices.... that's all.... ok? wishing you and everyone another profitable trading session.... :helloooo:

Edited July 13, 2011 by Predictor

[nakachalet 10]

This is all based on my own trading. Yes, I trade at NADEX and have $1,000 in it now. I'm trading a $3,000 model account though. It was me who had the $250-$260 today and ended losing $260! It was not a good feeling. You can for sure open a 1k account (or a 3k account) and trade with good leverage. All risk is predefined unlike futures.

 

Everything is based on my experience. I tend to trade the open because I lose more in the evening. One thing is that the NADEX contracts expire. A lot of people who trade futures also don't have margin for overnight exposure. If you enter a trade at 2:00 PM then you only have 1 hour for it to work. If it goes immediately against you then there isn't time for it to recover. Futures market is @ 1315 right now. If my contract had not expired, I'd be break even.

 

I can tell you learning to trade the morning session is the most profitable period for me. Trading the open is how professionals make their living, see Bella.

 

To make a meaningful return from a tiny account, you can't use the same rules that would be used in a larger account. 2% of 3000 is $60. That's a trivial amount. Risking about 8% to 10% per trade is required and reasonable (it was 8% loss of my account but 25% of the margin I have in the account). Of course, this is very difficult. Only trade with capital you can afford to lose.

 

thx much for explaining, much appreciated really. i just do not wish to see trading comrades losing their acct way too quickly.... if i could help to stretch the losing percentage to cover nine months.... that trader will more likely than not learn the trading patterns to just survive and to just preserve the initial investment or what is left.... just a few months longer.... in the hope that by then.... after a solid year trading live.... he will learn enough to just sit tight and just sit and sit and sit.... until his recognized trading pattern develops on screen in front of him.... yes, at that moment.... your heart beat would race close to 180, your throat would dryup, your hand would shake and your finger would tremble uncontrollably.... but at that precise moment you would remember what your personal stats and personal trading plan tell you.... it is time.... boy.... go and get it.... :rofl:

[sdoma 10]

the market is dynamic

 

take what the market can give you

 

So you don't limit your losses when you trade? There's no point at which you call it a day?

[Tams 20]

the market is dynamic

 

take what the market can give you

 

So you don't limit your losses when you trade? There's no point at which you call it a day?

 

that was neither the intent, nor the spirit, (nor the wording) of my reply.

[sdoma 10]

that was neither the intent, nor the spirit, (nor the wording) of my reply.

 

Your first reply was "worst thing you could do." I'm not being combative, I'm just asking for clarification on your position. I understand where you're coming from, but I want you to elaborate.

[Tams 20]

the market is dynamic

 

take what the market can give you

 

So you don't limit your losses when you trade? There's no point at which you call it a day?

 

Your first reply was "worst thing you could do." I'm not being combative, I'm just asking for clarification on your position. I understand where you're coming from, but I want you to elaborate.

 

no, you did not ask me to elaborate,

you put words where there were none.

 

and the post you quoted wasn't about "worst thing you could do."

[Tams 20]

worst thing you can do is to set a daily profit goal.

 

the market is dynamic

 

take what the market can give you

[MightyMouse 12]

 

3-Many successful traders just trade the open and morning session. I also do better with morning session. Trading late in day has many pitfalls, namely, limited time to recover and more fakeouts.

 

If you are aware of the late day pitfalls, why don't you simply take advantage of them instead of avoiding them altogether?

[peterjerome 10]

I'm wondering if any of you use daily profit goals or downsides when you trade. For example, are you done after you lose $500, or take in $1000?

Also, what do you consider profitable?

 

sdoma,

after my initial breakeven stop, i will sell 1/3 of my position at 30%, another 1/3 at 50% and the final 1/3 i let run. i will sell this final 1/3 when the profits run up and pull back 50% of the 'final' move up.

 

from the very beginning of the trade, i will never give back more than 50% of my equity(their money). i haven't taken a loss in some time. it's a great feeling.

 

i realize there are a couple of hedge fund managers here making 'billions'. perhaps they will weigh in and share their methods.

 

peter.

[sdoma 10]

worst thing you can do is to set a daily profit goal.

 

the market is dynamic

 

take what the market can give you

 

I agree, you should never set a minimum profit which you must hit. My question was more about a kill-switch amount after which you stop trading for the day, up or down. Example, if you made 1000 trading 2 lots on the YM, you'd stop trading, etc.

 

The reasoning is that if you have analyzed your results from many days of day-trading, oftentimes patterns emerge. For example, maybe you tend to give back a big part of your day after hitting a certain profit level per contract. Or maybe most of your losing days are within $300 per contract, but after that level you tend to experience large losing days. In this case, it would be beneficial to set a downside at $300.

 

A lot of people set these limits anyway, but I find that using your own stats over time might yield a better result.

[SIUYA 11]

i realize there are a couple of hedge fund managers here making 'billions'. perhaps they will weigh in and share their methods.

 

peter.

 

sure - you charge fees, take a global macro viewpoint, build positions and follow trends, use other peoples money....oh and did I mention charge fees.

[sdoma 10]

Ok, this thread isn't about:

 

-Trading the morning as opposed to the rest of the day

 

-The total amount of your account you risk on one trade

 

-The structure of NADEX contracts

 

-How hedge funds make money

 

This thread is about whether or not you manage your intraday P/L and if so, how you do it and your rationale.

 

If you want to argue that that is counterproductive, that's fine, but most professional firms make you do this and enforce that policy via risk managers. I'd be open to a discussion on its utility, but let's try to keep it germane to the topic.

[SIUYA 11]

(sorry sdoma....i could not help myself.)

 

and I am with Tams.....putting limits on things is not a great thing and I view it this way.

 

If you have a system that is back tested etc etc; then you should be taking EVERY trade as you dont know when they will win or loose but if you put limits on it then you are selling the system short and then why bother having a system.

 

If you have a more discretionary viewpoint then this changes things to the extent that you are ideally only trading when you think the odds are in your favour and have already applied your filters, and so again you should then be taking most trades as they appear, and not just when you made some arbitrary amount then stopping.

 

however....if you know from your own experience you lack the focus in the morning or the afternoon and that you are better not to trade then, its a different story.

 

It boils down to this.....a daily profit or goal is another arbitrary number that will limit your profitability.

I would also disagree with what you said with this "but most professional firms make you do this and enforce that policy via risk managers"...... this might be true for the boiler shop type rooms that really make their money from you paying them commissions etc, (not really my specialty) but the only time I have seem this in place in the serious prop shops is on a few occasions - when managers have pulled people aside and told them to take a break after a series of loosing trades or massive wins - not based on some arbitrary number but based on knowing that it was affecting their mindset - and this is not done on a daily basis.

[avir4tg 10]

A couple of quick thoughts.

 

1) I stop trading if I take 3 consecutive losses. I evaluate if I lost on good trades, meaning I followed all of my entry rules but still got stopped out. If this is the case I walk away for 15 minutes and come back with a totally clean perspective. No direction bias, etc. If my losses were due to not following rules, then I'm done for the day.

 

2) My trading style is very short term scalping. I have a daily goal that I will often stop at. Being done early is one of the benefits of being a full-time trader.

 

3) I only trade e-minis. If there is a clear and decisive trend (1500T, 550T charts never cross over my EMAs) I may stick around and take advantage of what the market is offering for the day.

 

4) I also have a 3 hour a day trading limit that I have to admit I break more often than I should. I typically stick around longer if I'm down for the day. Gotta continue to work on this one.

[russellhq 10]

...If you have a system that is back tested etc etc; then you should be taking EVERY trade as you dont know when they will win or loose but if you put limits on it then you are selling the system short and then why bother having a system...

 

I agree you should take every trade but that's only to make maximum profit. You don't have to take every trade, as like you said, you don't know whether the next will be a winner or loser so if you miss it, no biggie, it'll even out in the long run. And sometimes you shouldn't take every trade.

 

 

I think there are 3 key factors when executing a trade:

 

1. follow the rules of the system exactly

2. Your environment allows you to follow the rules exactly (ie nothing is going to get in your way of making the trade as per the system rules e.g you're a scalper and you're waiting on an important call that could come in the middle of a trade and stop you closing at the correct time)

3. You are psychologically fit to make the trade and stick to the system e.g. you've had a run of losers and you're starting to doubt or second guess the system, you're psychologically unfit and shouldn't make the trade as you're unlikely to stick to the system

 

 

Therefore I don't see a problem with having a stop loss for the day that stops you taking a trade flagged by your system if losing causes you to lose focus and not follow the system.

[SIUYA 11]

I agree you should take every trade but that's only to make maximum profit. You don't have to take every trade, as like you said, you don't know whether the next will be a winner or loser so if you miss it, no biggie, it'll even out in the long run. And sometimes you shouldn't take every trade.

 

yep....thats an interesting one as it nails the whole do you let the system trade or do you have a system of rules that you follow but also look to break those rules, and the system not only gives you a point of reference for the profitability but also for the losses (you can take a crappy computerised backtested system and make it profitable by only taking certain trades)..... this is why I view context as so important.....

 

Ultimately for me the default position is to take the trade, and a lot of this stems from my days as a market maker where (contrary to popular opinion) you are actually given a position. (that position my have a theoretical edge right at the start) but after that you then need to decide what to do with that trade.

Do you run it, hedge it, cut it, reverse it?????

 

So by taking every trade (or at least mentally being prepared to taking every trade) you are following the system and you have to come up with legitimate reasons for not to take the trade, or at least ensure you have a close stop so that a loser costs you very little......all semantics but it can help the mindset, and ultimately if you are following a system and you dont want to take most of the trades then the obvious question is....why follow the system at all....

[sdoma 10]

If you have a system that is back tested etc etc; then you should be taking EVERY trade as you dont know when they will win or loose but if you put limits on it then you are selling the system short and then why bother having a system.

 

If you have a more discretionary viewpoint then this changes things...

 

I was speaking primarily in terms of discretionary trading. That being said, even a mechanical system could potentially be optimized with these types of rules. If you backtest your system and look for streaks of wins and losses, and you find that on most days you suffer up to four losses, but on 3% of those days, you suffer many more losses, say 15, then it's obvious that you'd want to set your down side or cutoff at four losses.

 

Has anyone analyzed their win and loss patterns? People seem to be telling me that they don't want to limit themselves, but wouldn't it be beneficial to eliminate your largest losing days? I think that if you are a discretionary trader, these types of controls can really increase your profitability and perhaps save your butt if done right, using the right protocols.

[russellhq 10]

sdoma, in your example, if you limit the days with more than 4 losing trades, you also limit the days where you turn around and have a number of winning trades turning the day day into a winner.

 

As stated before, if you have a system that has a proven edge, then you should take every trade the system offers unless you dont think you can execute the trade inline with the system.

 

Also, if you stopped after the 4 losing trades, you will likely increase the number of days with 4 losing trades as the system has to balance out.