A daily $ goal - Psychology and Money Management | futures io social day trading
futures io futures trading


A daily $ goal
Updated: Views / Replies:9,454 / 75
Created: by David_R Attachments:0

Welcome to futures io.

(If you already have an account, login at the top of the page)

futures io is the largest futures trading community on the planet, with over 90,000 members. At futures io, our goal has always been and always will be to create a friendly, positive, forward-thinking community where members can openly share and discuss everything the world of trading has to offer. The community is one of the friendliest you will find on any subject, with members going out of their way to help others. Some of the primary differences between futures io and other trading sites revolve around the standards of our community. Those standards include a code of conduct for our members, as well as extremely high standards that govern which partners we do business with, and which products or services we recommend to our members.

At futures io, our focus is on quality education. No hype, gimmicks, or secret sauce. The truth is: trading is hard. To succeed, you need to surround yourself with the right support system, educational content, and trading mentors Ė all of which you can find on futures io, utilizing our social trading environment.

With futures io, you can find honest trading reviews on brokers, trading rooms, indicator packages, trading strategies, and much more. Our trading review process is highly moderated to ensure that only genuine users are allowed, so you donít need to worry about fake reviews.

We are fundamentally different than most other trading sites:
  • We are here to help. Just let us know what you need.
  • We work extremely hard to keep things positive in our community.
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts.
  • We firmly believe in and encourage sharing. The holy grail is within you, we can help you find it.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community.  It's free and simple.

-- Big Mike, Site Administrator

Reply
 
Thread Tools Search this Thread
 

A daily $ goal

  #31 (permalink)
Elite Member
La Jolla, CA
 
Futures Experience: Master
Platform: Sierra Chart, X_Trader Pro, OptionsCity
Broker/Data: Advantage, Trading Technologies, OptionsCity, IQ Feed
Favorite Futures: CL, NG
 
Private Banker's Avatar
 
Posts: 1,040 since Jul 2010
Thanks: 1,713 given, 3,759 received

Like just about everyone on here has said, I believe having a daily profit target is naive. Reason being, that would mean you are trying to enforce your will on something that is beyond our control. There is no way to accurately know before hand what the market will do day in and day out. It is best to simply manage your risk day in and day out while measuring your performance against what the day provided. For example, if you're trading the ES and it only has a 5 point range on the day while your daily monetary target is $250 per contract, you may have a difficult time getting that based on however you trade the market. This also works against you on large range days. With that same monetary target of $250 per contract but the day's range ends up being 15 points, well, you left a lot of money on the table.

Trading is all about managing risk first and foremost. The trading profits should be looked at as an average return because you'll have good days and you'll have bad days. Its all about how it averages out.

If you're new(er) to trading and are break even or slightly profitable, you're still hurting yourself if you have to make a certain amount per month just to pay the bills. Its more of a psychological thing vs. the opportunity to make your goal. The opportunity is absolutely there but just the knowing of you have to make a certain amount makes a trader overly risk averse. This will hurt you. Its best to have a secondary/complimentary source of income in place until you get to the point that you have enough capital set aside to cover your expenses for a year or so thus eliminating the "need" to make a certain amount per month/week/day.

With regards to account size, this needs to be looked at differently vs. the traditional money managers' returns. I would imagine a majority on here are intra-day futures traders. Futures trading involves substantial leverage. While you can lose big, you can also win real big. If you have an edge and manage your risk efficiently, you can accomplish what I call the first stage in trading which is account growth. Growing your trading account is similar to starting any other type of business. You need to increase your production and revenue while retaining earnings as much as possible while keeping your overhead low. As your account grows, you can increase the amount of "business" you're conducting while managing your risk and overhead. Once you're consistently starting to make more and more money, you can begin to pay yourself based on how everything is going. There will undoubtedly be setbacks and periods of rapid growth. But like any business, it needs to be approached tactically. Taking out your entire week's profits during the account growth phase is misguided and will hurt you.

Just like any small business start up, the growth phase is the most important part however, once you start to find success, you need to adjust accordingly while still looking for growth. This may mean changing the market in which you're trading. For example, let's say you've been trading Crude Oil and you've reached the point where you are looking to trade size. When attempting to do this, you begin to experience terrible slippage. This may be a sign that its time to move to a more liquid market such as the E-mini S&P or Bonds. At the end of the day, it isn't the market in which we're trading that matters, its all about the risk and liquidity in which the market provides. If you're looking to trade 500 cars on average, it doesn't matter the "sexiness" of the market, its all about market's ability to accept your business. This obviously applies to other businesses as well. If you're looking to build a massive amount of products but you've reached capacity in your factory, what do you do?

There will be a point where you find the "sweet spot" in your trading with regards to account size, risk, market(s) and somewhat predictable income. Until you reach that "sweet spot", you're in account growth mode. There is no advantage to starting trading with a $250k account vs. a $25k account. The overall results should be the same in context. Sure the $250k account can produce more income but it can also produce larger losses. I feel its almost better to start with a somewhat smaller stake. This teaches discipline and proper risk management. You only have so much but at the same time, the actual risk you're taking on is smaller. Believe me, I've seen "rich boys" blow out million dollar accounts multiple times. If anything, they were less disciplined because they had so much money and the business they were doing was reckless.

Bottom line, if you have a consistent edge coupled with sound risk management, you can find that sweet spot provided you approach it like a small business would. This means taking no or very little income at first. Having a secondary income during this period is crucial. Maybe you have a spouse that is willing to cover the expenses for the time being. Once you start to get some traction, you initiate a modest "salary" for yourself and go from there. Having a daily target amount will only stunt your growth. Trade the market for what it provides. Any other business doesn't set out to just make "this" amount of sales per day. They gauge it based on actual results of what the market will provide.

Reply With Quote
The following 93 users say Thank You to Private Banker for this post:
afranco562, Alanelcheco, alejo, AlexB, bartlb, Bharatiya, bijeremiad, bpr0, calitrader, cplotnik, Dan Gum, DarkPoolTrading, David_R, Daytrader999, Ddawg, DeadCatBounced, deltason, devdas, Dillons Grandpa, djkiwi, DR650, drakephoenix, empty, Futures Operator, futuretrader, Gary, GaryD, geez, goldenriver, GoSlow, hadamkov, hampton, Helios, Hguru, indiantrader, Itchymoku, Janos, john2000, JohnnyL, JonnyB, joselopezde, josh, Kairos, karoshiman, keymoo, kvnbrn, lancelottrader, Lee77, liquidcci, Littleruru, lovetotrade, lsubeano, madLyfe, marcopolo1, Massive l, mcteague, metalman, MrTrader, Nedhead, nomad, Noseyknows, oldspot, olobay, Outlander, PandaWarrior, para6ut, PaulK410, pddurant, phip, pudgey911, PushHands, rcabri, rdaytrader, Ron 52, salt, Scalpingtrader, sfalcon, Silver Dragon, sleepy, sman73, Smiles, strikebackfast, TideRip, toombsy91, trendisyourfriend, treydog999, ultrasound1, VinceVirgil, vvhg, Wagtail, wwwingman, Xav1029, ZarethKnyght
 
  #32 (permalink)
Elite Member
Lehrte, Germany
 
Futures Experience: Advanced
Platform: NinjaTrader
Broker/Data: PTP / Rithmic
Favorite Futures: NQ
 
Daytrader999's Avatar
 
Posts: 1,159 since Sep 2011
Thanks: 1,137 given, 1,565 received

Great explanation @Private Banker, thank you very much for pointing this all out.

Btw, I think this could be harder and more challenging than getting consistently profitable:


Private Banker View Post
Maybe you have a spouse that is willing to cover the expenses for the time being.



Last edited by Daytrader999; March 16th, 2013 at 06:05 PM. Reason: Wording
Reply With Quote
The following 3 users say Thank You to Daytrader999 for this post:
 
  #33 (permalink)
Elite Member
La Jolla, CA
 
Futures Experience: Master
Platform: Sierra Chart, X_Trader Pro, OptionsCity
Broker/Data: Advantage, Trading Technologies, OptionsCity, IQ Feed
Favorite Futures: CL, NG
 
Private Banker's Avatar
 
Posts: 1,040 since Jul 2010
Thanks: 1,713 given, 3,759 received



Daytrader999 View Post
Great explanation @Private Banker, thank you very much for pointing this all out.

Btw, I think this could be harder and more challenging than getting consistently profitable:

Lol! Totally agree on that one!

Reply With Quote
The following user says Thank You to Private Banker for this post:
 
  #34 (permalink)
Elite Member
Georgia, US
 
Futures Experience: None
Platform: Various
Favorite Futures: Various
 
josh's Avatar
 
Posts: 4,897 since Jan 2011
Thanks: 5,143 given, 11,242 received


Private Banker View Post
There is no advantage to starting trading with a $250k account vs. a $25k account.

Kudos for saying this. I wrote this a while ago which is basically a similar sentiment:


josh View Post
Being undercapitalized such that it severely limits your strategy is not good, but it's a lot better than being overcapitalized and being a bad trader.

Proper capitalization is important, but not being able to at least break even means someone is going to lose more money than if they had a smaller amount of capital to work with.


Private Banker View Post
Any other business doesn't set out to just make "this" amount of sales per day. They gauge it based on actual results of what the market will provide.

A business will still project revenue based on current YTD sales, for example. A question: do you think trading is so different that even this level of projection (on a yearly or quarterly level) would be futile, or worse, harmful? I tend to think it might be, as markets can change a lot from one year to the next and a trader may go through a period of transition where he just doesn't do so well. So in your opinion, while a daily goal is obviously a bad idea, what about a yearly goal, that is based on recent activity and is in line with past years? I could see a case being made either way, would love to hear your thoughts on it.

Reply With Quote
The following 2 users say Thank You to josh for this post:
 
  #35 (permalink)
Elite Member
milwaukee,wi, usa
 
Futures Experience: Intermediate
Platform: Mobile TWS & mobile TOS. Dough.com
Broker/Data: IB, TOS, FXCM
Favorite Futures: futures and options. looking into forex
 
lrfsdad's Avatar
 
Posts: 186 since Nov 2012
Thanks: 302 given, 160 received

Everyone seems to agree that getting out of the market what you can on a given day, week, month etc is better than a daily target. In my own business, I want to bill out as many hours as possible in a given day. Everyday is different. I have never quit after 4 hours for the day, cause that's all I need for the day. Somedays are 2 hrs and some are 8plus. Sounds alot like trading.

But, what if you have a full time job, expenses are covered etc. and you have a strategy you can trade at night or before work for an hour or two and you are comfortable with your R:R and can consistently make say $200? You are also disciplined enough to know weather or not to trade. Is this bad?

Reply With Quote
The following 2 users say Thank You to lrfsdad for this post:
 
  #36 (permalink)
Elite Member
La Jolla, CA
 
Futures Experience: Master
Platform: Sierra Chart, X_Trader Pro, OptionsCity
Broker/Data: Advantage, Trading Technologies, OptionsCity, IQ Feed
Favorite Futures: CL, NG
 
Private Banker's Avatar
 
Posts: 1,040 since Jul 2010
Thanks: 1,713 given, 3,759 received


josh View Post
A business will still project revenue based on current YTD sales, for example. A question: do you think trading is so different that even this level of projection (on a yearly or quarterly level) would be futile, or worse, harmful? I tend to think it might be, as markets can change a lot from one year to the next and a trader may go through a period of transition where he just doesn't do so well. So in your opinion, while a daily goal is obviously a bad idea, what about a yearly goal, that is based on recent activity and is in line with past years? I could see a case being made either way, would love to hear your thoughts on it.

I think that is certainly in line. Reason being is it would be based on actual results vs. a meaningless number. I think an annual goal based on that is reasonable but it might be smarter to update that as the year progresses on a quarterly basis just like any other business would do. Because like you said, markets will go through different phases as will a trader's results. There's really nothing static about trading as things are always changing and updating the annual goal on a quarterly basis would be a sound approach as it will remain realistic with the current environment. As the trader's account grows, they'll be able to take on more risk meaning trading more contracts and higher revenue. This can change the annual goal expectations which would be updated each quarter.

Reply With Quote
The following 2 users say Thank You to Private Banker for this post:
 
  #37 (permalink)
Elite Member
La Jolla, CA
 
Futures Experience: Master
Platform: Sierra Chart, X_Trader Pro, OptionsCity
Broker/Data: Advantage, Trading Technologies, OptionsCity, IQ Feed
Favorite Futures: CL, NG
 
Private Banker's Avatar
 
Posts: 1,040 since Jul 2010
Thanks: 1,713 given, 3,759 received


lrfsdad View Post
Everyone seems to agree that getting out of the market what you can on a given day, week, month etc is better than a daily target. In my own business, I want to bill out as many hours as possible in a given day. Everyday is different. I have never quit after 4 hours for the day, cause that's all I need for the day. Somedays are 2 hrs and some are 8plus. Sounds alot like trading.

But, what if you have a full time job, expenses are covered etc. and you have a strategy you can trade at night or before work for an hour or two and you are comfortable with your R:R and can consistently make say $200? You are also disciplined enough to know weather or not to trade. Is this bad?

I wouldn't say this is bad, its just tough to gauge if this will continue to hold true. If for example, you just trade the open everyday and then head off to work, there will be days that the market gives you a good trade and then days that will not. There will be days that you're right and days you're wrong. There are plenty of traders who only trade the first few hours of the day and do fine by it. If you can do this and have an average of $200 as you said, there's nothing wrong with that. You're obviously trading without the pressure of having to make money to pay your bills and are able to sit out the bad days. You can certainly pull this off. Its just that you'd be trading within a limited time period which would reduce your overall potential but in the bigger picture maybe that's fine given your circumstances. I guess the question is, what are you looking to get out of trading? My reference earlier was in light of looking to become extremely successful and making a substantial living through trading. It sounds like you're approaching it as more of a supplementary income which is perfectly fine. Maybe going full-time is a goal or whatever but it really just comes down to what you're looking to gain from your trading.

Reply With Quote
The following 2 users say Thank You to Private Banker for this post:
 
  #38 (permalink)
Trading for Fun
Sunnyvale, CA
 
Futures Experience: Advanced
Platform: TTTrader
Favorite Futures: CL
 
Posts: 160 since Dec 2012
Thanks: 8 given, 94 received


lrfsdad View Post
But, what if you have a full time job, expenses are covered etc. and you have a strategy you can trade at night or before work for an hour or two and you are comfortable with your R:R and can consistently make say $200? You are also disciplined enough to know weather or not to trade. Is this bad?

"Consistency" is the word to focus on. It's something that unfortunately does not describe trading or the markets. In fact, one thing you can bank on is the opposite of consistency; you can expect market prices, trades and series of trades to go in ways you "cant' expect." Sometimes you will have a string of 3 losing trades. Other times you'll have a string of 10 losing trades. Sometimes your drawdown will last for a week. Other times it will last for a month.

Reply With Quote
 
  #39 (permalink)
MATrader
Prague Czech Republic
 
Futures Experience: Beginner
Platform: S5 Trader, Jigsaw, SeasonAlgo, Sierra Chart
Broker/Data: IB/OEC
Favorite Futures: Eurex Futures
 
hadamkov's Avatar
 
Posts: 489 since Nov 2011
Thanks: 859 given, 391 received

I found this video very inspiring. It also might give you some answers to the questions about daily/weekly/monthly goals, though the title suggests a different topic:

Greg Weitzman on Squawk Radio presents "Building a Trading Plan: How Many Contracts I should Trade" - YouTube

It was originally posted in one of the futures.io (formerly BMT) veteran's journal but I do not know which one, sorry .

Successful trading.

Reply With Quote
The following 5 users say Thank You to hadamkov for this post:
 
  #40 (permalink)
Identify Evaluate Execute
Mercer Island WA
 
Futures Experience: Advanced
Platform: Ninjatrader/Strategy Desk
Broker/Data: Various
Favorite Futures: TF/NQ/ES/Stocks
 
djkiwi's Avatar
 
Posts: 561 since May 2010
Thanks: 980 given, 1,524 received


To add to this discussion the size of the account required is mostly dependent on the personal circumstances of the trader in my opinion. Let's look at 3 traders:
  • Trader A- lives at home with the parents paying no expenses may require only $25k in trading income per year to survive.
  • Trader B is married with 3 kids in private schools and a large mortgage, spouse working and bringing home $100k per year. The expenses total $150k but thanks to the income from the spouse the trader needs to make only $50k per year.
  • Trader C is also married with 3 kids in private schools and a large mortgage, spouse not working and needs to earn $150k a year to meet expenses.
All things being equal trader C will require a much larger account than traders A and B to produce the required income. A larger account (and therefore higher monthly targets) is also required to keep risk per trade as a percentage of account balance in check.

Based on personal experience, moving from Trader A status into the married with kids and house in good area etc increases the income requirements considerably. If you are Trader A, make the most of it while it lasts. Once you move to trader B status the edge needs to be far greater. Furthermore, there often comes a conflict between wanting to own a house and retaining the cash in the trading account. i.e. account could need to be raided to pay for the deposit on the house. In this instance the trader could be in a dilemma and gets a double hit. Not only do the costs increase due to the mortgage/property tax etc but the available cash/leverage to produce the required income decreases making the task doubly difficult.

Size of account

The reference to a $250k account as a minimum is directed at experienced traders using zero leverage. It assumes the trader collaterallizes the futures account with a swing equities account. For example if the equities account is $100k the trader can take a percentage of risk (1% or less) of the value of that equities account i.e. 100k. Additional cash will needed to be available for margin. If the trader's equities accounts grows to $150k then the risk per futures trade also increases proportionately. I've found this works very well to keep risk in check within the confines of a combined swing equities/futures portfolio. Based on my calculations traders with a sustainable and clear edge and net expenses on the lower side say Trader A or B could get away a with a much smaller account provided leverage is used sensibly. As this is all getting so far off topic I will setup a separate thread for this and provide some calculations/guidelines.

Having said that there was a question asked by Doctor Brett Steenbarger (quoted in another thread) to an Executive from a brokerage firm:

Dr Brett Q: How many small traders (i.e., those with less than $100,000 of cash in their accounts) sustained a living from trading?

Executive A: I've never encountered such a situation.

It's a sobering thought when an executive from a brokerage who has probably seen stats for thousands of accounts over many years has never seen a single trader make a living trading. Obviously there are outliers but it can make one sit back and reflect on the enormity of the task.

TraderFeed: The Capitalization of Traders: Why It Is Crucial to Success

New Traders

As @Private Banker rightly points out it would be foolish for new traders to trade to the maximum of their account no matter how large. If it's $5m or $5000 the result would likely be the same i.e. they will lose it all. Start small and once performance targets are met increase size accordingly. A good model on the forum is the journal of @Profiler. He is an experienced trader transitioning to a new instrument and shows the discipline to trade small and keep risk in check until an edge is established.

https://futures.io/trading-journals/25419-learning-trade-es-s-p-500-futures-contract-using-volume-profiling.html


Last edited by djkiwi; March 21st, 2013 at 05:17 AM.
Reply With Quote
The following 9 users say Thank You to djkiwi for this post:

Reply



futures io > > > A daily $ goal

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)

Jigsaw Trading: TBA

Elite only

FuturesTrader71: TBA

Elite only

NinjaTrader: TBA

Jan 18

RandBots: TBA

Jan 23

GFF Brokers & CME Group: Futures & Bitcoin

Elite only

Adam Grimes: TBA

Elite only

Ran Aroussi: TBA

Elite only
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
Goal setting to increase profits? Laguna Emini Index Futures Trading 3 March 14th, 2013 11:56 PM
Cuts to Achieve Goal for Deficit, but Toll Is High Quick Summary News and Current Events 0 March 3rd, 2013 12:30 PM
Crawling before I can walk with goal of one day running devshell Trading Journals 11 May 9th, 2012 07:09 PM
Goal setting and the software which can help Gary Psychology and Money Management 7 June 12th, 2011 02:53 PM


All times are GMT -4. The time now is 01:27 PM.

Copyright © 2017 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432, info@futures.io
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts
Page generated 2017-12-14 in 0.21 seconds with 19 queries on phoenix via your IP 54.234.255.29