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No trading today as I slept in on this Memorial Day....but after I got up, cleaned up and got some nice breakfast, I came and marked the entries as they would have presented themselves.
Some targets are small but with proper sizing today, it was enough to have made a couple of grand....
Now off to do other more important things....like take a nap or read a book....my family is out of the house and so there is some peace and quiet....might last for another hour or so.....got to take advantage of it while I can.
And while I am not a war monger, I certainly honor those that volunteer to place their lives at risk for mine....God bless the troops and keep them safe.
Simplicity is the ultimate sophistication, Leonardo da Vinci
Most people chose unhappiness over uncertainty, Tim Ferris
Just wanted to drop a humble opinion here after seeing how you set goals throughout your journal.
I don't know if you played sports or not (most traders did), but it's really important not to set OUTCOME based goals (like 30-50 ticks a day, or $1600/day) This opens up a whole box of psychological barriers to peak performance. Imagine if a tennis player focused on having a certain score for the set/match rather than hitting more high percentage cross-court forehands to his opponents weaker side.
From much better traders than myself, I've heard it's most beneficial to set PROCESS goals. Things you can directly control... because as we know, if you take care of what you can control... your ticks and $$ will follow accordingly.
Couple those process goals (with your current struggles), with good trading statistics (win%, avg win:loss, etc) and you'll be full aware of what weaknesses are showing up. Then re-adjust process goals to suit. A never ending process for me, I think it IS trading.
That's exactly right. Process goals make sure that one is working on developing relevant skills. Developed skills result in improved performance automatically, without worrying (and self-sabotaging oneself) over outcomes.
You are never in the wrong place... but sometimes you are in the right place looking at things in the wrong way.
Outcome based goals are a direct result of correctly pursuing process based goals. I know that if I execute my process based goals, my outcome based goal at least right now should average around that much per day give or take a couple hundred dollars.
The goal is not to make exactly $1600 a day, simply to execute my edge, money management and patience well enough to arrive at this outcome based average. Some days it will be more, some less.
I know all about process based metrics. I built and managed a very successful business based on the processes of doing the right thing over and over again and of course the money took care of itself...but guess what....over time, the law of large numbers took over and I could more or less guarantee I would make "x" number of dollars per day over time. And thats what happened. Same here, do the right things over and over again and over time, a pattern emerges.
The $1600 daily average is a number I arrived at from extensive review of average daily win given certain entry/exit rules combined with position sizing based on risk and a fixed % of my account I was willing to risk per trade and per day.
So I understand you point....its well made and totally relevant, however, it was arrived at after first determining the process needed to produce that daily.
Simplicity is the ultimate sophistication, Leonardo da Vinci
Most people chose unhappiness over uncertainty, Tim Ferris
I had one trade where it seemed I just couldn't wait to get in....impatience set in...so I sized down, got in, go ten ticks and the feeling of having to trade left me. Patience took over and I had a nice day.
I was gone for the big move down but so what. I took my kid to school and that was worth it.....its why I trade. I was up $1200 at that point and if I got no further trades on the day, I would have been happy. I finished with one more, got $463 on it and finished over my daily average target. Enough for the day.
Simplicity is the ultimate sophistication, Leonardo da Vinci
Most people chose unhappiness over uncertainty, Tim Ferris
I have believed this viewpoint for quite some time but I now doubt its validity. Most traders will say that you cannot control the market (which is true) and that as a consequence, you cannot control your return (which is "less true"). An opinion I share with many others is that trading is a performance activity. In other words, success at trading is, like professional sports, a matter of psychology, knowledge/skill, experience, drive, etc. In sports, the process of setting specific goals has the effect of driving one towards those goals, of giving one a structure within which to both create guidelines for action and to judge the results of one's actions. I would argue that this process works in trading as well. By setting specific goals (either on a daily, weekly, or monthly, etc basis) one creates a framework within which to judge one's actions. A goal can help a trader limit losses and let winners run. A goal can help a trader use proper size when the probabilities are skewed (such as in strong trends).
Most of my viewpoint on this matter comes from studying the work of Ari Kiev. To say that Kiev "believes strongly" that a trader must set specific, monetary goals to achieve their highest performance is a massive understatement - this view is the very basis of his life's work and worldview.
I'm going to use a non-trading analogy (with apologies to Monpere) which Ari Kiev uses. Kiev worked with olympic athletes for over a decade and he has said several times that there is no athlete who had the goal of "doing the best they could" who achieved a gold medal. In fact, he says that the ONLY athletes who won a gold medal were those who created the very specific goal of winning a gold medal and then did what it took to create that result in the face of uncertainty, setbacks, competitors, etc. He has worked with hedge-fund traders for much longer and his viewpoint has been reinforce by this work.
It is worth considering these ideas before jettisoning the idea of "promising a specific result in the face of uncertainty and with no guarantees of achieving that result".
Seek freedom and become captive of your desires. Seek discipline and find your liberty. - Frank Herbert
I was going to send a PM, as to not hijack a trading journal thread, but I find it dangerous for others to read your post. Your make several valid points on their own, but they do not validate the topic of setting a $ P/L goal for a single trading session.
The key is that A) we cannot control our return over a single session. Just like a casino can't control a session, nor can a professional poker player (both having an edge such as a trader). and B) the difference between a long term goal or a vision must be differentiated from daily goals. They are two different animals that work together, but have separate roles.
If one sets outcome goals for a single session then there is a problem, the outcome is largely out of our hands. The market may not offer opportunity for it on that day/session. Some days a breakeven session is a success. If you have process goals, success on a day like that will be evident. If you keep your $ P/L goal (outcome goal), you will have to break your own goal rules to realize it was OK to breakeven that day.
Your point on sports/olympic gold medalists is valid, and true for setting a VISION.. not goals set to get there. A vision is very very important and will help motivate and stay the course through setbacks and such as you mentioned. Research into peak performance and sports psychology will tell you this. This vision setting example is not applicable to our discussion on setting a $ P/L goal for a single trading session.
If you must set $ P/L goals, then given what we do (trade an edge with random distribution of winners and losers) we must set the $ P/L goal over a period of sessions, not a single session.
Yes, I don't want to hijack either - I will just say a couple things: The statements above are true only if you believe that trading is a mathematical game with a random distribution of winners and losers and that in trading you just have to follow your trading rules and take whatever the market gives. If, on the other hand, you believe (as I do) that trading is a performance activity and that your skill, experience, and psychology determine whether you win or loss based on how well you are able to trade, then the above statements are not true. Be sure you choose which of these two viewpoints you believe in before risking money on trading.
Seek freedom and become captive of your desires. Seek discipline and find your liberty. - Frank Herbert
The participants did not want to hi-jack the trade, but I have to say that I like a lot this kind of hi-jacking!
Thanks, @PandaWarrior, for having let it unfold. The discussion is quite interesting.
I was recently asking to myself: during a day, am I supposed to stop trading after, let's say, I have reached twice my average daily "target", or am I supposed to let the statistical game follow its course, and just take what the market has to give or not.
I know that there is no "final answer", and I have seen both attitudes in the journals on futures.io (formerly BMT).
Thanks, @Surly, @indextrader7 and @PandaWarrior for this discussion which has given me food for thought.
