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For those of you that are intraday traders and operate with a daily target, what do you do about a day like this with a lot of price action and opportunties? Do you still stop at your target or take advantage of what the market is doing and keep going?
Can you help answer these questions from other members on NexusFi?
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When you say target(in the context given) you make it sound as if it is fixed at a particular amount like 10 or 20 ticks or something.
If such is the case you are already making a mistake. You really should be focusing on going to the next area of support or resistance and adjust possibly depending if you get contrary p/a along the way. If for example you were trading to a pivot you might want to see if it goes through and if it does then move your stop just on the other side to give it the chance to keep going. That is one way to help maximise profits.
If that is not what your lookiing for and instead are asking if you should continue to trade after you have made what you consider to be ample profit for the day, the answer is yes keep trading....if your on a roll keep going. That is obviously a pretty generalised statement in that you probably don't want to initiate a trade 5 minutes from the close and so on but I think you know what I mean.
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This is a difficult hurdle that many new traders battle with when starting out. It's best to not focus on the amount of money you're making and better to focus on developing and perfecting your system/edge and money management. I know it sounds cliche' but it's the truth. You shouldn't be relying on trading as your sole source of income as well when starting out as you'll be putting unnecessary pressure on yourself to make a certain dollar amount. So, make sure to have some other way of paying the bills until you are a consistently profitable trader.
So, to your question, I do look to "average" a certain amount per day but the way I approach it is based on the day's market mood. For example, a high volatility day will provide many opportunities throughout the day and it's important to press hard on those types of days as they are day trader's gifts. And then on low vol/tight range days, you just have to try and again get the most out of the day which will be a bit less. But I look to try and get a certain number of winning trades vs. a monetary goal as the money clearly takes care of it self.
But don't get wrapped up in the $100 a day concept as your back will be against the wall at all times. Many new traders do this and have one bad day that wipes out the entire gain they've accumulated as they 1) haven't taken enough out of the market and 2) do not have good money management systems in place.
Perhaps a hybrid of some sort? Once reaching whatever the daily goal/target is, "trail stop" the P&L. As in, allow yourself to take subsequent trades (ideally only your premium setups), and then close up shop for the day whenever that P&L trail stop is hit. That way, you don't turn an otherwise profitable day into a losing one (which drives most people nuts I can safely assume, and also has the danger of snowballing into bad/worse habits in order to "get back to even").
I think the decision depends on how & why one has defined a daily target, mainly what role the target plays in your system. For example, if the target were established because testing shows statistically its the point at which your system starts to crumble it's probably unwise to break the rules and continue to trade. If the target were pulled out of the air (i.e., it's this month's rent, or $100/day and I can quit my day job ) then it's probably not a meaningful target in any event.
I picked daily targets and traded past them regularly on paper in the early days for the experience of trading (up to 20 hours/day). Three things that taught me were
1. we can earn only what the market & one's trading system are going to provide that day;
2. not to trade for any reason other than one's system has identified a setup and generated a trigger; and,
3. don't trade when judgement is impaired (i.e., if fatigue at the end of a long day spent trying to make a target, say, has overwhelmed common sense)
These days I don't use daily targets--decision to trade is based solely on whether the market is active and my system "likes" the action (profitable within spec), and whether I'm up for it.
I'm still not ready to throw most of the work and go to the market to earn , while 100% certainty not. but with each day, increasing the cap ital I near this dream into reality . and still I accustoming your brain to consider a profit of $ a profit in points... so probably more correct?
) then it's probably not a meaningful target in any event.