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I've found that after some wins it is easier to become "looser" with the rules, so I have a tendency to over trade and give back the gains made earlier. Stopping after a goal is discipline for me (if it is in your plan).
Can you help answer these questions from other members on NexusFi?
It definitely helps to have this kind of discipline. But the big drawback of such a strategy is, it will create a comfort zone for you to operate. Every time you take a trade outside your comfort zone and loose, it will act as a negative reinforcement for this zone. For me personally, challenging these zones are the most rewarding aspect of trading. It took a lot of effort from my side to get out of the comfort zone provided by the security of a full time job. True progress happens when you are willing to step out of the comfort zone and face your fears. Instead of creating this artificial boundary, face and fix your tendency to over trade. Journal the behavior, do the work to identify the pattern and address it. Such a strategy will help you in every aspect of your life, not just trading..
Platform: Sierra Chart, TOS, Tradestation, NinjaTrader
Trading: energy
Posts: 114 since Jul 2012
Thanks Given: 81
Thanks Received: 172
good topic!
when i first started, i used fixed price targets at dollar amounts. That evolved to using R multiples (risk 1 to make 3). That evolved into a lot of bitching about taking the first 10% of a big trend. Currently, i used a combination. Lets say im trading a 3 lot, i will take 1 off at a fixed scalp like 2$ on es, then another at 2-3R and then let the runner go. This seems to work best when trading intraday timeframes and sizes (like trying to grab a 2R scalp for 4$ off /es) while hoping for swing runners on the daily. I have found that the runner can often make 5-15R with a break even stop. I was extremely concerned that a b/e runner would get popped often enough that the "full loss" entries + the lack of taking offered profits would actually cause a decline in my P/L. On the contrary. Its turns out i am really good at taking the first 2$ out of a 10$ move and have increased profits by almost 60% with that runner. I also find that my profitability is always initiated in the first 90 minutes. i rarely successfully catch runners in the afternoon, so i usually stop around 12-2pm est.
I remember i sat in al brooks's room for a month or two after reading his books and being inspired to learn how to trend trade better from the 'guy who wrote three books on it'. All he ever did was scalp 2$ on a large size. I believe al is a great trader and has a solid approach, so i resisted using runners, and focused on picking good cherries. When i was introduced to Mack's videos, his approach is to scalp a piece and let some run. After modeling it, i could quickly see how that catching a 10$ move a couple times a week with a runner could enhance profits 400% over those 2$ fixed targets.
fast forward 2 more years and now i generally am looking to pay for the 60% of loser stopouts i will take trying to catch that 10$ ride, by scalping enough at intermediate targets to keep my R multiple above 2, and my chance of success up.
In the spirit of transparency, i will share my results for this week on my 'johnny one lot scalping' approach on /es. In this account, i attempt to actively scalp my way into big winners intraday. It keeps me engaged/distracted in the price action while i painfully watch that 22$ profitable swing trade runner pull back 13$ for no reason.
I highlighted some key data points, which can be summarized with two basic trading philosophies "right or right out and let the market take you out of winners". You can see the results end up that the bulk of my 'take home profits' come from just a few runners, the rest are stops and scratches on trends that failed to launch.
ps- please keep in mind that this account is part of a larger professional-class portfolio. i am a full time trader and i don't know many people who can make real money with a 5 tick stop on /es consistently. do not do this, its cuckoo
Since I fall into this trade style category I thought I would throw in my thoughts.
Like others, I aim for a one trade, low points per day strategy, why?
Well I don't want this to be a full time job, I want to be in and out ideally under 30mins. So initially I aimed for 2-2.5 Points, this was an arbitrary figure that seemed achievable each day. However it can be frustrating when you see you could have rode this out for say 6 points.
Recently I adapted my strategy during greater volatility periods to use the next S/R line as my psychological target and this paid off. However the volatility reduced and i was still going for the bigger pay off. This stopped working so I will be returning to the smaller target for now. So yes I feel I can aim for bigger targets but the market must support this and I need more experience.
Why not make more trades? In the past this has been the most destructive thing I could do, idle hands and all that.
All of the analogies used in this thread have their advantages and disadvantages, their relevancies to and their differences from the original question, I think.
Ultimately, a good answer to "Why stop after Xpoints?" would be "Because methodical research has proven over a statistically significant number of trials that stopping after X points nets more overall profit than not stopping after X points". Which will doubtless be true for some traders, according to their personalities and styles and trading techniques, and untrue for others.
Put me in the "trying to have it both ways" camp: I generally trade 3 lots and close two of them at fixed targets, allowing myself the opportunity for the third to run and occasionally catch the start/continuation of a good trend, adjusting its stop-loss as it goes. It's by no means easy to prove, though, that this is more successful overall than closing the third lot at some other/different fixed target.
If there were an easy or obvious answer to these questions, we'd all have cracked them and not need to do the research?
I just watched the Kevin Davey webinar on diversifying strategies, and there's something not being realized in this discussion that I hope to explore.
Diversification isn't subject to just markets and time-frame, but styles and profit targets as well.
As @Tymbeline has demonstrated, he has goal diversification within the same strategy, by diversifying profit targets.
It is foolish spending time nitpicking which profit target method works best, when they all are the best, just at different times, which you can't possibly know until after the fact.
Utilize Pareto's Principle, as I see it, that 80% of your success come from 20% of your efforts. The greed is evident when we spend 80% of our time seeking the last 20% of success.
What is success? It's relative.
"When you sit with a pretty girl for two hours you think it’s only a minute, but when you sit on a hot stove for a minute you think it’s two hours. That’s relativity."
My point is that profit goals are different for everyone. If you have a 10k per month overhead, you better believe that your profit goals are different than someone with a 1k per month overhead. That's relativity.
So know what your game plan is, and work the plan. Know what your goals are, and make diversification work for you. Remember, greed kills.
Currently, i used a combination. Lets say im trading a 3 lot, i will take 1 off at a fixed 
and have increased profits by almost 60% with that runner. I also find that my profitability is always initiated in the first 90 minutes. i rarely successfully catch runners in the afternoon, so i usually stop around 12-2pm 
