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I think your wording may be kind of confusing, I would switch the ticks and the percentage. Something like, if the adr is 40 ticks and your looking to capture 10 percent of that, your goal would be 4 ticks. Same thing just slightly different because your objective is the percentage, the ticks are just what it currently equates to.
I've been trading over twenty years and I have never heard of a daily profit goal as a percentage per contract of average daily range. Maybe I'm old school or a retard...but I intend to make more than the entire range every day on a per contract basis. Why would anyone design to make less than everything offered during the time they where open for business? A daily goal short of perfection in my mind is a limitation.
While ADR is remarkably constant, I have no way of knowing what it will be or when it will or wont move so the concept is not something I am familiar or comfortable with. Like almost everyone I have losing days from time to time. Some days I leave the desk and read a book. I fish every time I get an offer. If I don't have anything better to do I trade. When I trade I try to take every penny.
Could you explain the metric please? I'll read the post again to see if I understand better after dinner. DB
Do not understand. Is it important to have such a goal defined this way? If it is, whose authority makes it so? I would define a day in which I captured a number of ticks greater than the daily range as a good day. But that is not what you mean, I am sure.
It's just an exercise to get people thinking. I know of several big traders who think this way, but I am not surprised that most don't. It's also entirely possible my wording has lead to a lot of confusion.
So let's say the ADR is 40 ticks. My goal is to ask people how much their daily profit objective is, in terms of % of ADR. You need to calculate this on a 1-lot basis. If you take 10 trades a day for 4 ticks each, regardless of position size for each trade, then you would get 40 ticks or 100% of ADR. Of course other answers could even be more than 100% of ADR, although I think if someone honestly reviews say 100 or 1000 live trades, that is improbable.
Personally I also factor in commission into this. So net ticks per 1-lot / ADR.
I just want to get people thinking. Discussion about such things is fruitful in my opinion, much more so than discussions on where to enter a trade or what indicators are showing.
I am sure there are smarter or more accurate ways to frame the question.
Is it important? Well, it is important to me. It is important to several other traders whom I respect. But we are all different naturally.
If I am only taking 10% out of the market daily, then to me that is a useful metric and something which I can look to improve. It means the market gave me a lot more opportunity than I was able to capitalize on.
I will take a look at that as a performance metric. Still a little hard to define for me. Like asking a baseball player what his goal is for reaching base. Wouldn't the answer be every time. The metric, on base percentage would include a couple different items, but I'd say that a player whose goal is less than 100% is not worth his salt as a pro. Now there is a difference between goal and performance metric as both trading and baseball are not "games of perfection" Either way, I do not have a specific goal in ticks or dollars or % of range.
I want to trade well. To trade well is to make lots of money. So each day I review each trade for it's specific result and against what opportunity was there at the time. Sometimes a 50 tick trade is a failure and sometimes a 7 tick loser was a great trade. My goal is to trade well, the rest takes care of itself.
When you hosted that author Denise she mentioned something that I sort of did, but since I absolutely do. That is to focus on the bottom 20% of trades and look to improve or eliminate. It is a freaking beautiful thing when the bottom 20% of a period's trades includes winning trades. I believe that if my focus is there, on trading well that is a better metric, goal, outcome than hitting a percentage of a daily range. Does than make sense? Thanks for the interesting poll question and debate. Dan
I think now you're getting to the heart of the question. The distinction between a goal and a metric is what could be confusing. Perhaps what is helpful is to know what % of daily ATR are you capturing on average. Secondly what % of ATR do you seek to achieve in your trading. Some would suggest the second question should always be at least 100% but perhaps frame it in terms of next steps.
I think it also depends how you trade, what kind of a trader you are.
here're some extreme examples:
- the market shoots up 50 points, one big move, one swing. but it doesn't offer me a good opportunity to enter on a pullback. so the adr is 50 points and I don't get anything.
- now the market goes up 10 points, then down 10 points and up 10 points etc. it does that 10 times. so 10 x 10 point swings. the adr is still 10 points. but I might be able to catch 5 points out of every swing, leaving me with 50 points at the end of the day.
like I said those are extreme and not very likely examples, but you get the idea. so to compare your trade results to a naked adr number doesn't make much sense to me.
