So very true. About 3 months ago, I was trying to find a way to reduce drawdowns in my trading system (which is 100% automated). One thing I pulled out of the air was the idea of having a weekly target and loss limit, and quitting when one of these is hit, no matter what. And, hey presto, my positive-but-bumpy equity curve became almost as straight as an arrow - at least when viewed on a 2-year time line. And the final profit was almost the same. The system was maybe 85% as profitable, but less than 50% as risky. Of course, I had to play with different profit targets and loss limits to achieve a good balance, but the numbers that worked from Mar. 2006 - August 2008 have still worked so far.
I love the idea of a pre-set goal! I've been advocating the same thing on my trading blog - You only need your pre-determined goal - right? If you'd be satisfied with your goal in theory, so why are you trying to blow it out of the water while potentially signing yourself for some loser trades? I don't make a daily goal like the OP but I do make a per trade and monthly goal. I wrote a post on this a few weeks ago: http://emmaharveytrades.blogspot.com/2008/11/strategy-goals.html Keep it up! Stick to the plan and don't deviate, people!
So what is your strategy for doing $500/ day? 5000 shares and gain 10 cents ? 5 contracts and gain 2 points on ES ? .5M and 10 pips.. etc... ? I guess you could easily win over 95% of the time with a fast MA and you probably dont have to trade longer than an hour or somtimes even seconds. The problem is.. can you turn off your computer after winning $500 and not regret missing out on the extra $3 gain on stocks, the extra 40 points on ES or an extra 100 pips?
Certainly! I'm a disciplined trader - but not all are. Admittedly, advice and strategy are rarely one-size-fits-all. Good luck!
who cares about the money... Make good trades according to your own method, then add size. I think the minimal amount of $$ you need is for rent, food, car etc...Everyone has a different standard of living. Just keep the lights on and the refrigerator packed with food and brews The harder you try, the harder you fail... Good trading is effortless they say
Incorrect trading system from the get go... One of the oldest trading paradigms around: Cut losses fast, let profits run slow (with approprate stops). Successful career traders focus on RISKS and potential LOSSES first. The word PROFIT is the last thing on their minds (except to calculate the risk/reward part). Instead of thinking "I just wanna make 500/day then stop".... one should be thinking more like "lose no more than xxx/day" Profits literally have a life on their own and take care of themselves, ... it's the losses that need hand-holding.
Stopping once you've reached a daily monetary goal is counter-productive. I'd say even the act of setting a dollar value goal is dangerous as the trader has now planted a subtle, subconscious boundary on his performance. The main problem is that it ignores the issues of why the trader is losing even though he knows what he's doing. I recently read that part of what makes daytrading a demanding profession, especially for the novice, is that it's a two-shift job. The first shift is trading, the second shift is examining your trades. Stopping once you've reached some arbitrary goal limits your progress on the second shift. Are you losing because once you're up a certain amount and lose a bit off the top, you go on tilt and try to get it all back on one trade? Is there a certain trading environment that's ill-suited to your method? Is a fear of missing out making you jump the gun? There are dozens of reasons for a losing pattern, but the trader will never know because he's not taking those shots and then examing them.