It appears that a number of traders on this forum are against setting a daily dollar goal. How about setting a daily tick value goal? Would this be better than a dollar amount?
Or maybe a better goal would be that you look for your trading plan to setup everyday. Once the setup is located, then the goal becomes getting into the trade and making a number of ticks that are defined in the trading plan.
A trading plan is very important. This can be a set of guidelines and rules that you promise yourself you will stick to, but it must include when NOT to trade. By this I mean a few things. Have you hit your daily goal? Yes - stop trading. Have you hit your daily drawdown? Yes - Stop trading. Are you sick? Don't trade. Is it a FED meeting. Don't trade between the hours of x and x....etc etc etc. I think you get what I mean.
Really you want rules that define and outline your trading day and stick to them. You can make a rule to only take a setup that meets all of your criteria. It really is up to you, but I would say it is so important to have a plan.
Don't get hung up on dollars. Ticks/points/pips is where it's at.
- Trade what you see. Invest in what you believe -
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Below is an article by one of the Daytradethemarkets.com folks. It talks about the pros and cons of a daily goal. it's worth reading.
A Daily Profit Goal?
The issue is about having a daily trading goal.
What are the positives? Negatives?
Do you have a daily goal? Should you?
I personally have a pretty strong opinion about this, and I’ll explain that opinion in a moment. But first, let’s discuss…
Why Is A Daily Trading Goal So Appealing To So Many People?
There are several reasons. Mainly, it’s a simple concept that appeals to our human need for certainty.
After all, we’ve all done the math in our heads before. It’s “I want to make X dollars per month…I just need to make X dollars per day, which is X points on X contracts, and I’m there!”
It also fits in with what we’re conditioned to believe makes us successful. Set a goal > achieve the goal. And, generally speaking, that’s a good plan.
And, what’s more, that type of goal-setting works in most aspects of life.
Trading Is Different Than Most Aspects Of Life.
Like I mentioned above, we’ve been told to set a goal and then achieve the outcome.
For example, this works great if you’re running a business. In fact, most successful business people are successful because they are so driven. They make a decision, and then by desire and force of will, they make it happen. In other words, the more focused you are and the harder you try, the better you are likely to do.
Trading, however, is different. If you try to “make it happen” by sheer desire, you’re in for some trouble. You can’t “force” anything on the market.
In fact, you have to turn that “make it happen” attitude upside down. You have learn to be patient. You have to detach and let the market come to you.
I like to think of it like being an alligator in the swamp. An alligator just lies patiently in the weeds waiting for an easy meal. It doesn’t go thrashing crazily around the swamp chasing everything in sight.
Yet, that’s what so many of us do as traders. We go chasing after every little thing we see in the market.
How Does A Daily Trading Goal Accentuate That Problem?
Let’s take a slow, choppy day for example. In other words, let’s consider a day where there isn’t a ton of opportunity. That doesn’t mean you couldn’t have made money…it just means there wasn’t much to work with.
In fact, on these types of days, you can make a case that the best trading decision is to do nothing…to stand aside and wait for better days.
But – what happens if you have a daily trading goal? You’re more than likely going to force a trade.
What happens if that trade loses? Well, you’re down money, and you still have to reach your trading goal right? So, now you’re even more likely to force a trade.
What happens if that trade loses? Now, a disastrous day is a possibility. You force another trade or you hold it too long because you “need a big winner”. I think you get the point.
And, if you look back, what was at the root of this bad day? A focus on your results (reaching your daily trading goal). You were focused on money. You weren’t focused on your process. You weren’t focused on making the best possible decision in the moment.
More “Conditioned” Behavior
This also speaks to another conditioned behavior that most of us have. It’s to work hard in order to make money.
So, when you’re at your computer, you’re at “work” trading, right? You need to do something, right? Otherwise, it’s a wasted day, right?
Well, not so fast. As traders, we don’t get paid by the hour. We don’t get paid by the day. We get paid to be good decision makers. If we get very good at making decisions, we get highly paid.
Yet, we’re societally conditioned to work for a day’s pay. We’re conditioned to “work” for our money.
Additionally, a daily trading goal puts the risk/reward ratio in the wrong order. Think about this for a second. Let’s say you have a daily trading goal of $500 per day (doesn’t matter…could be $50 per day, could be $5000 per day).
What’s the best you could do if you’re “successful” and reach your goal? $500.
What’s the worst you could do? Unless you have a daily stop in place, your loss is somewhat unlimited. So, best case plus $500. Worst case minus ??
Plus, you force yourself to trade on bad trading days and you force yourself to stop trading on great trading days. Why would you do that? Some days the market is like an all-you-can-eat buffet. Those days don’t come around all the time, so why would you want to stop yourself after one serving?
What Is The Answer?
Ultimately, the answer is to find a strategy that works for you. If having a daily trading goal works for you, that’s great. I know for some people it does and they are able to manage the downsides of the plan.
However, in my opinion, in makes more sense to NOT focus on the results…NOT on the money…NOT on a goal. And, by definition, if your focus is a daily goal, you’re focused on the money.
Instead, focus on making the best possible decision in the current moment. Focus on staying in flow with the market.
That might mean the best decision is to not take a trade.
That might mean the best decision is to hold onto a winner longer than what feels comfortable because the evidence is telling you there is no reason to bail on the trade yet.
That might mean taking another trade because the evidence tells you that you have an edge, even if you already have a nice profit on the day.
It also means focusing on your ‘inner’ self and being aware of how you feel. Some days you just don’t have it. Maybe you have another life event that’s taking your attention. Some days you’re just not in flow with the market. Have the awareness to be able to step away.
Get Off “The Clock”
And, finally, try not to be defined by the “clock” when you’re trading. By that, I mean a couple things.
One, if you can get rid of the “day by day” idea of profit and loss, that will help. Yes, it’s hard to do when we get daily P&L statements, but if you can instead begin to define success by your decision making rather than by your daily P&L, you’re well on your way.
Second, don’t worry how much you trade each day. Some people do better trading 1 or 2 hours, some people do better trading the whole day. The key is to trade well (make good decisions) for however long you’re trading.
Thanks for having the patience to read this post. I hope you found it helpful.
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The difference in opinion seems to be statistical vs. emotional. If conditions are right, then of course it is better statistically to keep taking good trades. But even subtle changes in psychology can be very powerful. If there is definitive proof that decision-makers suffer emotional fatigue (I read that great NYT article about Decision Fatigue), then most of us will be more likely to trade worse as the day goes on.
Math says that if you have some small loss days, some small win days, and some big win days, but never EVER a big loss day (due to using some kind of daily cutoff), you're going to be making money overall. So how do you get to the big win days? It often means continuing to take good trades when conditions are good, or holding a winner a little longer than you would with a daily target.
So you have to find that balance for yourself and for the daily conditions. Recognize current conditions for what they are and notice structure changes as they happen. Find the balance in what you are able to maintain mentally and what the current conditions are offering, and you'll have the answer.
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In long run you will never know will the day be a losing or winning day SO you have to run every day.
There is no sense to limit your winning day profits. The very same is for losers too. If you cut your loosing day for example on the morning how do you know it is not the afternoon where the big fat beautiful swing in your favor will come and loss day will turn into a winning day?
So trade the whole day and every day. If you are loosing continuously then stop and fix your strategy. And then run it again continuously.
Do not get your emontions to come to your trading or you are done.
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The goal should be to trade well. Focusing on how much money or how many tics, pips or points you make per day will possibly do more harm than good.
The goal should be to follow your trading plan. Every trade is unique. You can’t know the outcome. Your edge is the probability that on any trade you will win more than you lose. If you only take the set ups that are in your plan you will eventually be profitable.
So your goal should be to take every set up that presents itself.
If you aren’t taking trades because you are afraid of losing realized profits or losing more than a daily limit then you are not accepting your planned risk.
It doesn’t matter if you take your next trade today, tomorrow or next month; you can’t possibly know if the trade will be a winner or a loser. So putting it off because you have reached a daily limit is not rational.
Focus on the process, not the outcome.
It is hard to find the Truth when you start your search with a preconceived notion of what the Truth will be.
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Having given back some of the week's profits 2 weeks in a row. I am going back to a daily/weekly target1, and daily/target2.
Part of the issue is I am working a new system and ended up over trading. On top of trading 2systems that are profitable.
When I stick with my daily goals the cumulative effect is wonderful at months end. I think part of my problem is trying to create unrealistic returns on a trade.
Essentially I am going to scale when I hit my t1, then let a small piece try to turn into a runner for t3. Of course this is market permitting and will scale all out if odds are not with me.
There will be a daily t1 as this trade happens daily, and there will be a scale at that trades t1 which is separate from the daily t1.
If I still want to trade and the daily/weekly t1 has been met, I am going to merely SIM it again.
Thus t1 is a daily/weekly achievable goal.
While t2 is a nice bonus.
I do not need my profits for bills thus that stress does not exist.
The scale satisfies both the fear and greed aspect. I lock profits in, but allow a runner.
I also think it matters on the type of trade it is as well. Balance or imbalance. A trend trader is looking more for the big winner, after a swing or few he can hide his stop behind sth/stl. AOr if using volume profile behind institutional orders, block trades and cluster orders. While a breakout momentum type trade may be based on rejection/acceptance.
If I am using a momentum trade like a breakout profits need to be taken faster as the entry in a trend traders opinion is late and one is likely to not survive the swing unless one scales then uses the profits to stay in the trade. If institutions move with "my" trade then I can stay in longer.
Last edited by KahunaDog; January 30th, 2015 at 05:54 PM.
Reason: auto txt spell errors
Favorite Futures: ES, fine alcohol and muscle cars
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Thanks: 800 given,
I also am more of a novice than some of the traders on bmt, thus my skill and trade finesse is not as adept as some.
My favorite set ups are not homerun trades, but rely on frequency of occurence. Depending on the ebb and flow of the market, a balance imbalance, acceptance rejection some of the trades I use can turn into a session trend move, but that is not those trades strengths or goal.
For myself I achieve better long term results with a weekly goal. The goal keeps me on track from giving back profits. The trade what you see idea has me at times over trading, or making other mistakes. Though one solid trade is not my goal, the sniper maxim "one shot, one kill" for me holds better truth.
Last edited by KahunaDog; January 30th, 2015 at 06:09 PM.