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And there is more to it. People in different parts of the world have different incomes in different currencies that have different values. But yes, that would be too complicated. I guess everybody can find him/herself in one of your categories. Thanks for that, I was thinking about it after reading your posts in this thread.
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The question of 'a daily goal' is interesting and i am wondering what those traders that attempt to pass a combine at topsetp think about this aspect and how they manage it. Do they set a daily goal or not?
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As a trading beginner I had this idea too to set a daily goal. If this was reached I had to quit.
Today I see the scene from a different angle:
1) The market is *not* the same every day
2) One can not press out more than the market is willing to give
3) So I reduced to a one trade per day model during the most probable winning hours
That prevents from overtrading which is often the momentum to give back gains the same day in a stupid way.
One other possibilty to prevent from overtrading is - depending on your trading style - to limit trades by
number per day and in effect of some statistical daily results from the very own trading results in the past
like "never trade on Fed announcement days" as example.
See the homework and statistics thread for ideas.
In short: I am lucky when my trade does not kill the stop loss. I am happy when a trade brings a small gain.
I am extra glad when a trade gives a big gain.
The only thing that counts is surviving in the markets aka gaining more than losing.
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I posted below on another thread that didn't get much attention. The below applies here as we'll.
Good Trade, Bad Trade, Winning Trade, Losing Trade
This was sent to me and thought I'd share it. It was given to a trader by their mentor. I think this makes good sense, but seems we are programmed to think other wise.
If you learn nothing else, learn this:
Good Trade – A trade taken in accordance with your rules.
Winning Trade – A trade that makes money.
Bad Trade – A trade taken that is not in accordance with your rules.
Losing Trade – A trade that loses money.
The trading methodology that Richard Dennis taught his Turtles is arguably one of the most difficult trading methods for a typical trader to execute. Not only does it require the trader to hold on to winning positions for extraordinary lengths of time and profit, but also it requires continually adding to that position if the market moves in the direction of the trade. Since adding to positions raises the average price, the Turtles will often give back substantial profits on retracements and often be stopped out of a trade that rode a significant trend with no profit to show for it. While all trend traders play for the outlier, Turtles play for the outlier of the outliers—typically just one trend a year. How is it that they have the discipline to hold on to positions for so long, continually adding all the way? How is it that they can maintain this discipline after having watched so many profitable trades go bust? And how is that such a large percentage of the people Dennis taught were able to do this successfully when these qualities seem so rare?
The answer is that the Turtles learned very early the difference between a Good Trade and a Winning Trade and the difference between a Bad Trade and a Losing Trade. During the two-week training course, Dennis told the Turtles that he wasn’t evaluating them on whether they made money, but whether or not they stuck to the methodology. Since traders could lose money for long periods of time trading his method, it was especially important that they understand that as long as they took Good Trades, they would ultimately make money. Whether or not the trade was a Winning Trade was of no consequence. If these traders evaluated their performance in the short/medium term on profitability, they would have folded a long time ago.
For another example, let’s look at Mark Weinstein (also profiled in Market Wizards). Weinstein has an extraordinary win/loss ratio and has achieved this by being ultra-selective with his trades. As a result, Mark must necessarily pass on an enormous number of trades that subsequently go his way. What would happen to his trading if he lamented every missed opportunity and or lowered his standards every time he “missed” a trade so that it would meet his criteria next time? What would happen if he treated the next trade with a view to “not missing it this time?” I would imagine he’d be like the majority of the people—a losing trader.
Mark isn’t superhuman. He would probably lament the missed trade like anyone else if he actually saw it as a missed trade. But he doesn’t. Mark knows that his job is to take Good Trades. A trade not taken that ultimately “wins” doesn’t bother him because his final decision was that it wasn’t a Good Trade. Many rookie traders would beat themselves up about “missing a trade” and their trading would be negatively affected for the next series of trades, often disastrously.
Knowing the difference between a good trade and a winning trade, and a bad trade and a losing trade will be one of the most profitable, stabilizing, productive distinctions you will ever make in your career as a trader. For the rookie trader, “missing” a winning trade is more demoralizing than taking a losing trade. But by far the worst trade for a developing trader would be the Bad Winning trade. All it serves to do is reinforce behaviors that will ultimately ruin him/her. Many of the traders in Market Wizards made their greatest reforms after taking a disastrous Bad Losing trade. I really hope that all your Bad trades will be losers (though I don’t hope they’re as disastrous). Taking a Good/Bad trade is within your control, taking a Winning/Losing trade isn’t.
How do we best use this information?
1. Create a set of objective rules for determining what constitutes a Good Trade. If there is a discretionary range within the rules, and you were within the discretionary range, the trade is still Good.
2. By default, know that any trade that has yet to be classified as Good is Bad. If you’re still evaluating whether a trade is Good, it is still Bad. All trades are Bad until proven Good.
3. When you take a Good trade that loses, Stand Proud knowing you had the guts to take a small loss.
Last edited by David_R; March 23rd, 2013 at 02:14 PM.
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Excellent question and since I have taken a couple combines I will give my 2 cents.
I think it's natural to say to ones self that if I do a 10 day combine with a 50k account and a profit objective of $3500 that I need to average $350 per day. It's actually a bit more with commissions. I think the problem in making $350 a day the goal limits ones potential when things are going well on a particular day. When I say things are going well I mean that whatever method one is using, and whatever rules are being followed seems to be in alignment with the market such that trades are getting good results. So, it makes sense to me to follow the plan and if that means the results provide $50 or even a small loss, so be it. Because in reality one or two good days could yield the $3500 or more.
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I just finished up a combine and is what I found; if you try to reach a daily goal, which I did, you will have a very high probability of failing. There is a inherent conflict of interest between risk management and reaching a daily goal. Traders tend to sacrifice risk management when they are trying to reach a specific dollar amount per day. A better approach is to pick a combine based on what you are capable as a trader to consistently make.
My first combine was 100k which caused me to try to make 500 a day. After evaluating my trading at the end the combine I figured out that I am not capable of making 500 a day. What I am able to make is 75 to 150 a day with the occasional home run. Based on this I can reach the goals of a 30K combine without making any changes to my current trading style.
This provides me a edge going into the combine because I am not focused on how much I need to make; I am focused on trading and risk management.
nosce te ipsum
Trade what the market is doing; NOT what you think its going to do.
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