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Win Limit - Do you have one?
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Win Limit - Do you have one?

  #1 (permalink)
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Win Limit - Do you have one?

Every trader should have a Loss limit to protect from losses. But what about Win Limit to protect profit?

A Win Limit would be considered a tick or monetary goal that when reached ends your trading for the day/week/month.

below is my couple of reasons for having one which I orignially posted here: https://futures.io/trading-journals/12454-pandawarrior-chronicles-112.html#post264851


Quoting 
You bring up a interesting thought; Protect profits and manage risk are 2 mainstays of trading so It begs the question: Why don't traders have a win limit for intra day trading?

This could be especially helpful for new and less experienced traders since they run the risk of letting emotions taking over resulting in giving back most or all of their gains.

Even for experienced traders this could be helpful by requiring discipline on the winning and losing side.

Rule would be something like: Win limit would be enforced when trader is flat and total net profits are over the win limit.

So my questions to the traders at large are:
Do you have a win limit (goal) for the trading day/week/month?
Do you stop trading when it is reached or reduce size?
Whats your reason for having one? or what is your reason for not having one.

Robert

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If you have an edge that works then why limit its use/profits?

If you do have a win limit, I believe a benchmark should be used.
If S&P is up 1% on the week then your account should be up greater than 1%.
Otherwise, you are comparing profits in a vacuum.

I reduce size when I'm losing, not winning.

Psychology > Strategy ≥ Money
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For beginners, having limits is always helpful - mainly to combat stupid decisions that beginners make that are tied to emotions instead of their edge.

But for advanced traders that are consistently profitable, you shouldn't limit your potential.

Mike

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Big Mike View Post
For beginners, having limits is always helpful - mainly to combat stupid decisions that beginners make that are tied to emotions instead of their edge.

But for advanced traders that are consistently profitable, you shouldn't limit your potential.

Mike

BTW, I should add of course if you have statistics that demonstrate you routinely give back money in the afternoon or after 'xxxx' in earnings, then you should definitely act on that.

Mike

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2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
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Silver Dragon View Post
Every trader should have a Loss limit to protect from losses. But what about Win Limit to protect profit?

A Win Limit would be considered a tick or monetary goal that when reached ends your trading for the day/week/month.

below is my couple of reasons for having one which I orignially posted here: https://futures.io/trading-journals/12454-pandawarrior-chronicles-112.html#post264851



So my questions to the traders at large are:
Do you have a win limit (goal) for the trading day/week/month?
Do you stop trading when it is reached or reduce size?
Whats your reason for having one? or what is your reason for not having one.

Robert

I think its imperative to have a daily loss limit but not a daily profit limit.

But as Mike has mentioned there is a bit more to it than this. Ideally you should press your advantage when you are up for the day - some very good traders have even recommended that you should start to increase your size after a reaching a certain tick/point/monetary target for the day.

However I know for a fact that after say 3 consecutive 2R wins (not that common!) I tend to to become less risk averse, and this winning streak invariably is followed by several losses. So the issue is psychological and I am sure that my stats would suggest stopping trading for the day after reaching a certain tick target.

The larger picture working against this though is that generally I have a low strike rate but a high R per trade. In tandem with this is the fact that there are normally 3 to 4 days a month where I make most of my monthly profit and this statistic suggests that I need to press my winning days as much as possible.

Interesting question!

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As a beginner, I have a daily win limit. It is primarily to keep me from getting over-confident and making stupid trades. It's a reminder to me that if I can consistently make a decent amount, I'll be more successful than if I can hit an occasional home run. I have a daily loss limit to keep from revenge trading, and a daily profit limit to keep from getting winner's syndrome.

Again, that's as a beginner who is still going sideways. I will eliminate it when I am consistently making money and have better conquered the psychological aspect of trading.

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Silver Dragon View Post
So my questions to the traders at large are:
Do you have a win limit (goal) for the trading day/week/month?
Do you stop trading when it is reached or reduce size?
Whats your reason for having one? or what is your reason for not having one.

Robert

Do you have a win limit (goal) for the trading day/week/month?

Yes, I have a win limit/goal. I believe having and achieving goals is an important psychological boost for myself as a trader. I set my goal(s) based on trading times, not day, week or month. I break down the Euro Globex 23 hours of trading into 3 sessions Asian, European and U.S.. I approach the three sessions with a completely different attitude and often use completely different tools. I expect different nuances to the price movements of each session and have on occasion traded all three sessions because of my goal limit, which can and has been achieved on my very first trade.

Do you stop trading when it is reached or reduce size?

Yes, most generally I stop trading "that session" when the goal has been achieved or I'm darn close. I try to always trade the same size, I find it the best way for me to evaluate my method. Since I believe in a random distribution of wins and losses reducing size at any point during any session makes no sense to me.


Whats your reason for having one?

Of all the components that make up the world of trading, money is the easiest to count. If a trader has a goal of "making money" he/she is in for an incredible journey, if he/she has a goal of making (X) amount of money per day, week or month, there are many ways to accomplish this. No matter what trading method a trader chooses to use to accomplish his/her trading goals, the path to success is going to be straight thru their individual psychology. The beliefs I hold about money may not concern you in the least, they're mine and I have to find a way to get comfortable with the equity swings of my account. I don't care if I'm counting ticks, a percentage or dollars these swings have a way of effecting my psychology and that has a way of effecting my trading decisions. My goal is to increase my account equity every day, if I put on one trade and my session goal is reached, I consider my goal achieved and walk away a winner. If I feel I have an edge, whether it's a "secret" indicator or my personal trading experience it doesn't matter, because I believe in the random distribution of winners and losers. I haven't found many behaviors in my trading as demoralizing as watching the profits of my very first trade evaporate away as I continue to trade the entire session. Since IMO, no one, can predict the outcome of any trade or series of trades, stopping when my account reaches a new highwater mark works for me. Believe me, stopping trading when I'm up for the day is just as hard as taking two losers in a row and sitting on the sidelines with the final bullet in my gun waiting for one more opportunity with the hope that the next trade will be a winning trade in the day's series of random distribution of winners and losers. I found increasing the size of my trades was the stepping stone to achieving greater profits, not dancing with the devil with an expectation of beating the odds of the random distribution between winners and losers. I hope my view/opinion was presented in an understandable manner. Great Topic

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I'm no better or worse than the next trade. For me it's not P&L that determines when to quit but deciding before each trade whether I'm still on top of the game.

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My favorite strategy on this question


I've had this discussion with several clients on this specific question, and my favorite was from one particularly sharp and successful trader that approached much like his strategy for executing trades.

He traded a $10,000 FX account and placed small, quick scalp trades, typically risking $100 per trade.

Here was his strategy:

Every day he had an initial 'stop loss' of $500 on his trading, meaning that if he lost $500, he stopped trading for the day.

He had a profit target of $1,000. When he reached $500 profits, he would move his 'stop' up to breakeven, and move the target up to $1,500.

He was a pretty active trader and implementing a 'trailing stop' on his trading activity let him stay in on days when he was on a roll, and got him out on days when he wasn't, protecting his capital and profits both.

It thought it was pretty cool and somewhat original.

TraderBrian

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