Trading without a target - Reactionary trading

[SpearPointTrader]

Hey guys!
I was perusing the forums today, and I ran across a number of threads where comments were made about having a target where the trade should end, before you even enter it. I know it's fairly common to do this. My question is "Why"?


In order to do that, would one not need to be clairvoyant? How can you possibly know how far a move will go? Would it not be better to develop a system where you have a set up, where you enter when the set up appears, and exit when it dissolves, at whatever the price is when that happens?

If you do this, you are more likely to enter with the move, and get out before it turns.

A good example of this is a bollinger band squeeze. You would enter when the squeeze confirms direction. Then, as long as the bands are getting wider, the set up is in play. As soon as they stop getting wider, the set up is dissolving.

Now, it may dissolve right away, or you may have a substantial move before it dissolves. This gives you a method that adjusts with the market conditions, rather than a hard rigid exit that may, or may not be in sink with the changing conditions of the markets.

What do you guys think?


THE RISK OF LOSS IN TRADING COMMODITIES CAN BE SUBSTANTIAL.
THE HIGH DEGREE OF LEVERAGE THAT IS OFTEN ATTAINABLE IN COMMODITY TRADING CAN WORK FOR YOU, AS WELL AS AGAINST YOU.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS

 

[OptionParty]

Some spread trades like Verticals have caps that limit the profit of the spread.
That makes it possible to close the trade at a fixed price, or adjust to lock in the profit.
If you're still motivated to be on the trade you have the oppertunity to put on another trade.

 

[Giovan]

You go for what you want. If its 100pips, let that be your target. If it falls short , take what the market gives you. However it all depends on the indicators that you are using for your trade. Whereas BBands will give your dynamics targets, fib targets are fixed.

 

[SpearPointTrader]

You go for what you want. If its 100pips, let that be your target. If it falls short , take what the market gives you. However it all depends on the indicators that you are using for your trade. Whereas BBands will give your dynamics targets, fib targets are fixed.

Hmmm. I don't think going for what you want works. The markets do as they will, regardless of what one wants. They also change the game in mid stream too. So rather than try and rely on something ridged and inflexible like a Fib level, you need a way to know when a move is over, in a more dynamic way.

In other words, if you do have a rigid target, and the market is going to fall short due to a change in the conditions (which always seems to happen), how do you know, so you *Can* exit and take what you can get?

THE RISK OF LOSS IN TRADING COMMODITIES CAN BE SUBSTANTIAL.
THE HIGH DEGREE OF LEVERAGE THAT IS OFTEN ATTAINABLE IN COMMODITY TRADING CAN WORK FOR YOU, AS WELL AS AGAINST YOU.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS

 

[Giovan]

In other words, if you do have a rigid target, and the market is going to fall short due to a change in the conditions (which always seems to happen), how do you know, so you *Can* exit and take what you can get?
I like calling it intuition, but with experience you start taking profit partially so that when the market turns, you can finally close the trade completely.

 

[SpearPointTrader]

Hmmm. Intuition is not an indicator. Although lots of people do trade off of intuition. However, I am looking to discuss more specific, quantifiable, repeatable methods that self adjust, rather than that.


THE RISK OF LOSS IN TRADING COMMODITIES CAN BE SUBSTANTIAL.
THE HIGH DEGREE OF LEVERAGE THAT IS OFTEN ATTAINABLE IN COMMODITY TRADING CAN WORK FOR YOU, AS WELL AS AGAINST YOU.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS

 

[DrewTradeN]

You're initial target should be based on the amount of risk you are taking in the trade, so if your stop is at 8 ticks your target should be at 16 ticks if you're looking for a 2 to 1 risk to profit. But the amount of the stop loss and target is what you want it to be. you can always move it once the buy and decide you want more or less of a target.

 

[NVP]

Targets are useful for salespeople and Marksmen ...........not traders