where should profit target be placed? - futures io
futures io futures trading



where should profit target be placed?


Discussion in Traders Hideout

Updated by Fat Tails
      Top Posters
    1. looks_one anniebee321 with 3 posts (0 thanks)
    2. looks_two hondo69 with 2 posts (0 thanks)
    3. looks_3 Fat Tails with 2 posts (2 thanks)
    4. looks_4 Big Mike with 1 posts (1 thanks)
      Best Posters
    1. looks_one Eric j with 2.0 thanks per post
    2. looks_two Fat Tails with 1.0 thanks per post
    3. looks_3 Big Mike with 1.0 thanks per post
    4. looks_4 renkos7 with 1.0 thanks per post
    1. trending_up 2,741 views
    2. thumb_up 6 thanks given
    3. group 6 followers
    1. forum 9 replies
    2. attach_file 1 attachments




Welcome to futures io: the largest futures trading community on the planet, with well over 100,000 members
  • Genuine reviews from real traders, not fake reviews from stealth vendors
  • Quality education from leading professional traders
  • We are a friendly, helpful, and positive community
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts
  • We are here to help, just let us know what you need
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

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

 
Thread Tools Search this Thread
 

where should profit target be placed?

  #1 (permalink)
london
 
Experience: Beginner
Platform: ninja
Trading: fgbl
 
Posts: 152 since Nov 2009
Thanks: 64 given, 44 received

where should profit target be placed?

where should profit target be -- should it be pivot pt, gann level, fibonnacci level number ending in 00, hi of yesterday, close of yesterday...........am confused

Reply With Quote

Can you help answer these questions
from other members on futures io?
Convert NinjaTrader NT7 indicator to Tradestation EasyLanguage and RADARSCREEN
Platforms and Indicators
Issue meeting order entry conditions
Elite Automated NinjaTrader Trading
Last 5 minutes Label
ThinkOrSwim
Moving average with Lag reduction
NinjaTrader
Linux?
ThinkOrSwim
 
 
  #3 (permalink)
NY
 
Experience: Advanced
Platform: Esignal, MBT navigator
Trading: Currencies
 
Posts: 2,526 since Jun 2009
Thanks: 1,396 given, 2,576 received


Hard to say . I see some people that I would describe as scalpers and they dont wait to take profits > 1:1 risk but they get lots of small gains that add up and a stopout might be 2 times larger than most gains . They need to have like 80 - 90 % winners to stay ahead . That suits their style but generally the target , at least the 1st one with multiple contracts , could be just short of a swing level is logical . On the chart here the green arrow is the short and see that price stops near the swing low and thats always happening on all timeframes . The 2nd target here is a major low but Ill bail if a bar closes higher than the prior days high .

Attached Thumbnails
Click image for larger version

Name:	swing low.jpg
Views:	112
Size:	55.9 KB
ID:	14813  
Visit my futures io Trade Journal Reply With Quote
 
  #4 (permalink)
Market Wizard
Berlin, Europe
 
Experience: Advanced
Platform: NinjaTrader, MultiCharts
Broker: Interactive Brokers
Trading: Keyboard
 
Fat Tails's Avatar
 
Posts: 9,824 since Mar 2010
Thanks: 4,237 given, 26,522 received

Most beautiful colour?

This question is as easy to answer as "what is the appropriate colour for a flower" (from the view point of a bee, LOL).

If you trade you need a concept which provides you an edge.

The concept would include

- a setup (all sorts of conditions that need to be met)
- a trigger (signal that triggers the position at a defined level)
- a stop-loss (point where the trade idea is no longer valid)
- a profit-target (depends on conditions above)

One thing leads to another, and there is no independent rule for a profit target. You will need to evaluate your trade idea via a backtest, by determining

- the win/loss ratio (average winner divided by average loser)
- the percentage of winning trades

Psychologically it is more difficult to trade a system with a low winning percentage and a high win/loss ratio. So you might try to find something that has a win/loss ratio between 1 and 2 with a high winning percentage. Even in this case your profit target should be further away than your stop loss.



anniebee321 View Post
where should profit target be -- should it be pivot pt, gann level, fibonnacci level number ending in 00, hi of yesterday, close of yesterday...........am confused


Reply With Quote
The following user says Thank You to Fat Tails for this post:
 
  #5 (permalink)
london
 
Experience: Beginner
Platform: ninja
Trading: fgbl
 
Posts: 152 since Nov 2009
Thanks: 64 given, 44 received

am still waiting for more answers to come in --- do not know who selected above as answers to my original question??

Reply With Quote
 
  #6 (permalink)
Site Administrator
Manta, Ecuador
 
Experience: Advanced
Platform: My own custom solution
Trading: Emini Futures
 
Big Mike's Avatar
 
Posts: 48,729 since Jun 2009
Thanks: 31,462 given, 94,000 received


anniebee321 View Post
am still waiting for more answers to come in --- do not know who selected above as answers to my original question??

Annie,

"Where should your profit target be", without knowing your exact method and style, is equivalent to asking "how do I make money trading". Very ambiguous, highly subjective, etc.

If you are seeking advice on how to improve upon your existing method, you will need to share that method, example trades, screen shots, etc. Only then can someone offer some better advice.

Your profit target is set by your trading style. You might want to watch the MTF Webinar I did, I go over some basic trading styles. Are you a scalper? intraday trader? swing trader?

When setting a profit target, you should also consider your stop loss limit. The market will give you several "hints" of where a target and stop should be, you'll find to find which one "speaks" to you. When you come across a trade that does not have a favorable risk/reward, you should pass on it. Again, favorable is subjective. There is no simple, "right" answer, like "You should use fibonacci's to set targets".

Mike

Mike

We're here to help -- just ask

For the best trading education, watch our webinars
Searching for trading reviews? Review this list

Follow us on Twitter, YouTube, and Facebook

Support our community as an Elite Member:
https://futures.io/elite/
Follow me on Twitter Visit my Facebook Visit my futures io Trade Journal Reply With Quote
The following user says Thank You to Big Mike for this post:
 
  #7 (permalink)
Austin, TX
 
Experience: Intermediate
Platform: NinjaTrader
Trading: Currencies
 
hondo69's Avatar
 
Posts: 165 since Jun 2009
Thanks: 57 given, 245 received

I'll throw in my 2 cents, but I don't think you'll like my answer . . . .

When trading only 1 contract your target should be small, say 3 or 4 pips. The idea is to slowly build the account until you can trade multiple contracts. Use a stop that matches your target and don't over trade. Take at most 4 trades per day, 1 is best.

When your account size reaches a predetermined goal, say + $2000, then add a 2nd contract and keep with the same plan.

At the point the next goal is obtained, add a 3rd contract. Now things change.

When trading 3's like this, the first 2 contracts are your bread and butter, looking to grab those 3-4 pips as before. The 3rd contract will be different in that it is more flexible and can be used as you see fit as each trade develops. Ideally, you can let it run with the market and realize some nice gains with it.

But each trade is different and you have to play it by ear. One day you might be able to grab 40 pips, the next day only 2 with it. The great thing is that the first 2 contract are out with a profit, so the 3rd is a free trade. No pressure, no emotion.

Should that 3rd contract start moving nicely your way, move the stop to BE +1 and walk away for awhile.

Reply With Quote
 
  #8 (permalink)
london
 
Experience: Beginner
Platform: ninja
Trading: fgbl
 
Posts: 152 since Nov 2009
Thanks: 64 given, 44 received

whatever your target is -- "3 or 4 pips" the market may have already decided it has hit its resistance level and reverse before you can take profits -- hence my question. the market does not care what yr personal profit targets is -- it only cares where it is intending to go/stop/pause/reverse -- i actually no longer think this is a subjective question .. but still looking

Reply With Quote
 
  #9 (permalink)
Austin, TX
 
Experience: Intermediate
Platform: NinjaTrader
Trading: Currencies
 
hondo69's Avatar
 
Posts: 165 since Jun 2009
Thanks: 57 given, 245 received

Well, you do have to employ a strategy.

And every strategy has it's own requirements, such as breaking support or resistance, crossing a pivot, etc. Most people are targeting those areas where the market will make a strong move, thus being the safest point to enter.

If you have a large account and can afford a large stop, then you may use a strategy that looks for bigger gains. Smaller accounts must have smaller stops and therefore must employ completely different strategies.

Reply With Quote
 
  #10 (permalink)
Market Wizard
Berlin, Europe
 
Experience: Advanced
Platform: NinjaTrader, MultiCharts
Broker: Interactive Brokers
Trading: Keyboard
 
Fat Tails's Avatar
 
Posts: 9,824 since Mar 2010
Thanks: 4,237 given, 26,522 received


You will look from two different angles at profit targets and stops:

(1) The money management view: How much can you afford to lose, what is a decent reward-to-risk ratio

(2) The market view: Where is your trading idea no longer valid, where may price stop and reverse

Sometimes the two views are incompatible and you cannot put on a trade, sometimes you can reconcile the two by adapting position size in a way that your trade complies with money management and market stops.


The profit target is most difficult, because there are hundreds of ways to establish profit targets, to name some:

- Bollinger Bands, Keltner Channels, fixed percentage enveloppes
- trend lines or trend channel lines
- support on resistance such as prior highs and lows, fib retracements, fib extensions, opening range, today's midrange, balance point, murrey math lines
- floor pivots, weekly and monthly pivots, Woodie's or Camarilla pivots
- measured moves derived from size of prior swings, ABC corrections
- expansions of trading ranges
- round numbers
- rule of seven
- volatiliy based, range expansion bars
- volume stop, low volume bars, churn bars
- moving averages
- linear regression indicators
- areas where buy stops and sell stops are located
- point of control of market profile

and you can extend this list ad infinitum.

One way to avoid the question of the profit target is to trail you stop. This is particularly useful if you have a low probability trade with an extremely favourable reward-to-risk ratio (low winning percentage, but wins much higher than losses). You could have a look at the 2B or Turtle Soup setups, which fall under this regimen.

A scalper will do the opposite, look for a high winning percentage with a reward-to-risk ratio of about 1:1, so this allows for a profit target close to entry point.

It is a jungle and there are no traffic rules to follow in the trading universe. As Mike said, it is highly subjective.


anniebee321 View Post
whatever your target is -- "3 or 4 pips" the market may have already decided it has hit its resistance level and reverse before you can take profits -- hence my question. the market does not care what yr personal profit targets is -- it only cares where it is intending to go/stop/pause/reverse -- i actually no longer think this is a subjective question .. but still looking



Last edited by Fat Tails; June 7th, 2010 at 08:58 AM.
Reply With Quote
The following user says Thank You to Fat Tails for this post:



futures io Trading Community Traders Hideout > where should profit target be placed?




Upcoming Webinars and Events
 

Understanding Order Flow Stop Runs & Icebergs w/Bookmap

May 28
 

Free BloodHound Licenses to everyone!

June
     



Copyright © 2020 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