Do You Set a Profit Target?

[minimal]

Just out of interest - how many of you futures traders have a daily profit target and stop as soon as you finish?

When I first started trading a few years ago at a prop firm, I was always taught no matter what the time is when you hit your target leave. Even if you have hit it it within 10 minutes of trading, simply go.

If so, what are your daily profit targets and what do you trade?

I currently trade ES and have a daily profit target of 5 points. When I used to trade the Bund/Estoxx, I had a daily profit target of 15ticks.

The only reason I ask this is because I got into a debate with someone the otherday - he said you shouldn't have an upside target. Which I personally disagree with!

Cheers,
Minimal

 

[minimal]

I have just read the title I gave this post. I cant change it now but I am interested to hear from any trader, not just futures traders!

 

[shortsell]

personally i would feel pretty stupid passing up a bunch of set ups because i happened to have had a good morning, only to find that a set up doesn't appear at all for the next couple of days when i'm sitting trying to reach my arbitrary daily target.

each to their own though.

 

[Jaydee]

Personally, I don't think you should have an upside target but you should have a downside stop.

My reasoning is that, the market is likely to be trading in a way that suits your style when you are winning. Therefore, you should make the most of such days and not limit yourself.

 

[timsk]

I have just read the title I gave this post. I cant change it now but I am interested to hear from any trader, not just futures traders!

Hi minimal,
I've amended the thread title in line with your comments - hope you approve!
Tim.

 

[minimal]

Nice one Timsk

Cheers

Hi minimal,
I've amended the thread title in line with your comments - hope you approve!
Tim.

 

[tomorton]

I never used to use a profit target but see now that I was over-concentrating on finessing entries, while letting profits go back into the market.

TA should identify your target as well as it identifies your entry. It's less contentious that TA can identify your stop level, for example by identifying support, but as far as profit targets are concerned, they are what you're trading for - if you don't know what the prize is, how will you know when you've got it? If you don't know your destination, how will you know when you have got there?

More practically, your TA should tell you that, for instance, and using round numbers, 80% of the time, such and such a type of entry leads to a price rise of 100pts. Your TA also says that this entry has a stop 50pts below, so you now have a valid entry, stop and target with a 1:2 r:r.

You can increase your target if you wish, to say 200pts, but you should know before you do the probability of price reaching there from your entry signal. If this is only 20%, it is not worth the attempt. And when price does not reach +200pts, what will you do?
a) let it run back to +100pts, the original target. Fine, except that it may take weeks to get back there, tying up your capital and attention for no additional gain.
b) institute a trailing stop-loss. This will get you out at, say +142pts. But your original TA could have told you the probability of price reaching +142 from entry to be only 43.4%, so it really wasn't worth the risk.
c) let it run back to -50pts, your original stop-loss. What a waste of time.

If your TA can't tell you what I suggest it should, you shouldn't be putting on a trade yet.

A good trader can always get back in, so you can't get out too early.

 

[MrGecko]

@tomorton

I think the OP is about $ targets in the day ($1000 and I'm off) rather than targets per trade.

A for effort though

 

[tomorton]

@tomorton

I think the OP is about $ targets in the day ($1000 and I'm off) rather than targets per trade.

A for effort though

Thanks MrGecko, I was indeed ignoring the important detail. But I stand by what I say. If your methods can generate 1 trade a day only, know its target and take the money. But if your methods can generate 20 consecutive trades, keep going. If you come to a net loss position at any time, trade through it back into profit. if you don't do this today, you're going to do it tomorrow anyway.

 

[MrGecko]

Yes for trade targets, no for day targets.

There is something floating about the internet on Taxi drivers that makes the point pretty well.

 

[JDTRADER]

I'm a London Cab Driver and I think the same principal applies:

Having a good day and its all going your way, KEEP WORKING
Having a bad day, GO HOME

Tomorrow is another day !

Target 50 pips per day

 

[timsk]

Yes for trade targets, no for day targets.

My view is that whatever works for you is the right way to go. I'm (mostly) on the other side of the fence from MrG!

Trade Targets
I trade 2 contracts and have a very tight profit target for the first contract. This means that if I'm stopped out for a loss on the second contract, I break even on the trade as a whole. I do have a nominal target for the second contract - although this tends to get moved - up or down - according to the price action. The idea being that if the trade starts to stall or go against me, I can close the second contract at b/e or, hopefully, for a small profit. If momentum starts to build, I can move the target further away (and trail a stop) to let the profits run.

Daily Targets
I used to be of the opinion already expressed that if you're doing well - keep going - and if you're not - then set a maximum daily stop and call it a day if it's hit. One of the many psychological trading issues that I have (tehe) is that if I do well, I get complacent with inevitable results. So, I'm now coming around to the idea of having a daily target and, once it's hit, stopping for the day. This has two key benefits (for me):
1. Because the target is modest (3 points on the ES), it helps me to be more selective on my trades and to only take the highest probability set ups.
2. If I hit my target there's no possibility of me getting cocky and ending up giving back my profits to the market through over trading - as has happened soooooo so many times in the past.

I would stress that it's a case of horses for courses and this approach will make no sense and be quite wrong for other traders!
Tim.

 

[Pento]

Never stop trading when you hit your upside target. Up £1000 in first 2 minutes then increase your target to £2000 and so on.

I'm guessing the prop firm you started at is no longer in operation. With a methodology like that I can't see them having survived the last couple of years.

 

[D70]

I think this comes down to "it's all in the head".

If any of you have ever done anything challenging, you will know that there is a massive benefit in knowing where the "finish line is". For example, if you were running and your coach said, "i'll tell you when to stop", you are in a much different mind set to if your coach said, "stop after you've done 26miles". Until you have overcome your "demons" and realised (excuse the cliche) that anything is possible. Having a trade profit target and a daily target help hugely with your mental state and what is possible and acheivable.

It also does other things like make you have a trade plan and not be greedy. Key hurdles most traders fall at.

 

[MrGecko]

I had a couple of problems with fixed daily targets:

* if I hit my target and I stopped, usually I felt pretty good about myself and enjoyed my "free" time... but this was counterbalanced by generally feeling pretty sh1tty when it wasn't likely I was going to make it - it was a roller coaster

* on the days that I did stop early, whenever I looked back at the action I missed I convinced myself that there were sitting ducks that I didn't trade, and then tended to overtrade the next session to try and make up for it

D70's right, it's all in the head.

 

[slight]

I think I get why you would have a limit to the upside as well to the downside. It probably all has to do with handling your emotions and not getting over-confident. Even though you might miss out stopping at your limit to the upside, you are making sure you don't let your emotions be out of control the next trading day. However, I don't have such a limit, not even to the downside. But then, i dont trade intraday so much .. my trades run at least a couple of days and I just take every setup there is for that.

 

[MrGecko]

If any of you have ever done anything challenging, you will know that there is a massive benefit in knowing where the "finish line is".

Absolutely agree here - "you can't hit a target you can't see"... but I think trading without a fixed daily target isn't necesarrily not having a target, it is just a slightly different target. Sports psychology really helped me grasp this bit, for example Wilko and his place kicks - his "target" is to go through exactly the same routine and execute his "kicking plan" is perfectly as possible, like doing that thing with his hands, the little jiggle with his foot etc. So I made up a procedure list for what I should be doing before, during, and after the day, and also a procedure to go through for each trade. I made a little form in outlook to do it all, so it's literally ticking boxes and doesn't take up too much time. Then the next day I mark myself on how well I executed my plan, my target being to get 10/10. Never done it though.

 

[Hilarymannah]

I personally had a target which sometimes took me to over a 12 hour day,..I decided to cut the target in half, which on average I reach at about mid day,.....today I achieved it by 8.30am,....life's for living,...: )
BTW: It's always nice to know you can go for more,..if you feel like it !

 

[4xpipcounter]

I trade forex, only. For me it depends on what the objective is on my trade. If I am looking at a daytrade, where it seems obvious that a certain target will be hit during the day, and then I want to go to the lake or whatever after the trade is placed, then I place a TP on it. It is a little different on a position or longer term trade. Jump in, let it run, then place the TP as you get close to what may be a reversal.