Forums > Trading for a Living > Trade Management > Merits of setting profit / loss targets, before entry

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Old Jun 26th, 2012, 11:18 AM   #1
Registered User
Join Date: Jun 2011
Posts: 47
Oh hai?

Does anyone have a strong opinion on this?
I have been developing an intense focus on the price ladder, with charts/profile by my side as support tools. I'm scalping FESX, typically taking winners and losers of 1/2/3 ticks, with a few outliers (good and bad) 4/5/6/7.

A big problem I am having is, I am micromanaging my trades excessively. If you stare at the price ladder long enough, you can find a million reasons to buy or sell.
And so it is, I can pick out a good entry, only to scratch it, or take 1/2 tick winner, and then watch it move another 5 ticks in my favour. My win rate simply is not good enough to offset the inevitable -1/-2 tick losers that mount up during the session, not to mention transaction costs.

I am seriously considering telling myself, for the rest of the week, to take either +3 tick winners, -2 tick losers, and scratch only if a +2/3 tick winner comes back to me - so that I give all trades a bit of room to breathe.

No doubt I'll take some -3/-4 tick losers along the way, but overall this profit/loss ratio target should work, assuming I can hit something a little better than 50/50 win rate.

+3/-2 ratio Pros: It prevents me from micromanaging trades, and helps me to remain relaxed during the session

+3/-2 ratio cons: To simply conjur up +3 winner / -2 loser as my target... it seems pretty arbitrary and therefore possibly stupid?

Help ?
Old Jun 26th, 2012, 06:43 PM   #2
Join Date: Jun 2011
Posts: 152
I don't set targets, because it leads to prejudice and emotional stress.

I just trade.

All the targets are set by computers anyhow. Do you really think your 2.05 STOP LOSS will hit first or the 2.049 or 2.051?

Show hand = giving brokers your target!

As a result, the liquidity bot will flush your stop loss.
Old Jun 27th, 2012, 02:46 PM   #3
Join Date: May 2005
Posts: 127
Why not try it for a week or two. There is only one way to tell if it works. I would be interested to hear how you get on. I have predominantly made money scalping the order book and works for me. But want to develop into running trades longer (still intraday) for 5-10 ticks. But can't make the transition. I have tried forcing myself to a ratio of 2:6 or around that and usually find I end up around break even. Probably down after round turns. I think you need to set your entry and exit based on factors in the Market rather than discretionary numbers in order to get an edge big enough to cover costs
Old Jul 2nd, 2012, 02:15 PM   #4
murray t turtle
Join Date: Dec 2001
Location: tn
Posts: 6,719
Quote from Froglet:

I don't set targets, because it leads to prejudice and emotional stress.

I just trade.

I usually dont set targets ;
good trends tend to trend better both ways- some say ''better than i deserve''

But when one is trading somehing that doesnt trend that well,[Like ES, other index derivatives...] I like targets.As a practical matter, some net profit is better than nothing.

I am not saying I specialize in trading things that do not trend well Wisdom is profitable to direct.

Lots of money has been in 1999,, 2008 with ES...some of it made with huge drawdowns- but you will never comvince me any ''turtle'' wanted to have a huge drawdown. Stuff happens
Old Jul 12th, 2012, 01:17 PM   #5
Join Date: Jan 2007
Posts: 29
I set profit targets for the day and stop loss for the day depending on how I see the market action shaping up. Personally, I tend to over trade and I almost always lose money in phase 1 and 3 of the daily market cycle.
This also translates into price targets and price stop losses based on the "patterns" I trade. So for every trade I have an idea of what my limits will be for the day and it changes each day.
I need to have some kind of a plan, otherwise I just churn.
Old Jul 13th, 2012, 04:48 PM   #6
Join Date: Feb 2008
Posts: 2,962
If I may a few questions:

(1) How long have you been scalping this instrument in actual trading?
(2) What commission do you pay?
(3) How many trades you do per day?
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