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I know quite a few traders who locate this technique of profit targets and loss targets ridiculous and merely trade the chart and take or lose what the market hands out, but I guess I am very yes about what I need to do on a given day. Incidentally, I cease trading about in the future a month as a result of hitting my loss restriction, and seldom miss my profit targets.
There are many days I have far exceeded my profit target. For instance, I may enter a trade with a 12 tick bracket and get into a pleasant trend and keep pushing stops and boundaries upward because the trend continues, but even then I get to a degree to where I am content to book a pleasant profit. And some days it makes for a very short trading session. I learned to target profits early in my career, when I was companies to a far extra aggressive trading style. I can't let you realize how many times I have been up 20% for the day, and then I decide to take one fell swoop with a knock out trade and loose all or an honest a segment of the profit. No, recently I like to book a pleasant profit and smile.
Here is a fact about my trading: When I am between $500-$one thousand in profit I often get overly conservative or cease trading all together. Now this number depends upon the dimension of the account you are trading, so the benefit of clarity let's say I am trading a $20,000 account. Yep, I assuredly cease trading when I hit my profit goals mentioned above? Even if I am flattening each trade, I assuredly am reluctant to take another trade.
I also pride myself on being consistent in my trading, so limits are a natural outgrowth of of a trading system, especially one like mine this is specifically effective in trending markets.
What about losses? First of all, I have to lose, and work very hard at managing my trades to influence clear of losing money. Alas, some days it is inevitable, and when I get down $one thousand I throw my cards on the table and walk away. Not out of anger. I have learned that some days aren't conducive to my trading style, and some days I am merely plain a bonehead. If you keep a trading diary, as I have suggested many times, you can go back six months, a year, whatever term you would like and see your boneheaded days and scratch your head in bewilderment. You suppose, "How in the world did ever suppose those trades were going to be profitable?"
At the time I took the trades I obviously thought they were good ones or else I would not have executed the trade. Like I said, there are times when I don't feel as comfortable with the market as other times and it shows up in my trading. I also cease trading if I cannot muster total concentration. If there is something that has occurred that causes me worry and I cannot devote one hundred% of my brain power to trading, I cease. So when I am down a grand, this is all the farther I will let the account fall. My father is a conservative man and considers trading to something such as a mixture of Roulette and Texas Hold 'Em is always happy to go golfing with me, and I am glad not to be trading.
This particular subject material is one this is yes to stir up some traders, and rightfully so. The question is a clear-cut one, really, and I am asking whether the need arises cease trading when you hit a pre-set profit goal. The argument is a tough one to respond to, and I suspect that as I get older I am getting extra conservative.
Sound crazy? It can be, but it is the manner I view trading. Along the identical line, I always like to have my first trade a winner, so it is not unusual to see me cut the first trade, if I am in the money, on 2 points in order that I start the day with a favorable balance. Then I work to trade into my profit target, and then I relax. Once I am well up for the day I like to lock in my profits. I don't need to infer that I make money each unmarried day, but most days I am in the black.
