Suppose you're a day trader with $50K in your account. You have a couple of great trades and made $5K by noon. Would be it a good idea to lock in some of the profits by putting some of $5K aside and not re-investing it? Basically, you'd pretend that you only had $53K instead of $55K and trade only that amount. Many traders start with the same buying power every day so if you had a $5K profit at the close, the profit would be withdrawn anyway. But the difference is whether you put aside some of the profit in the middle of the day by "logically" withdrawing it from your account. Has anyone tried it? Do you see any downside to this?
I lost a few hundred dollars in 2004 and stopped trading until I got my edge back which was a very long time, I'm almost ashamed to admit.
Its entirely up to you how you want to withdraw profits from your account. You can do it as soon as a target is hit. Or wait until the end of the day, week or month. If your aim is to make 10% say a month and withdraw half of that profit and leave the other 5% to compound.. i dont see anything wrong with that.
Prob the correct move... People will trade less when they are winning and trade more when they are losing... If your up and trading good, trade away, trade harder (whats the worst that could happen, you make 15K or break even i like those odds)... If your cold and have a loss, walk away, or slow up.... Its obviously not that simple, but the principle is....
I trade mainly futures, I have a low goal of $100 Per contract and cut back size by 80%. When I use to day trade IBM, I would either stop trading when I reached a dollar a share or cut back 80% of shares. This way I can't lose the blunt of the money I made and if I was getting close, I was done for the day. My main goal has always try for a profitable day even if it was just a few bucks, want a smooth equity curve.
The purport of this thread appears largely to rest on a 'hit or miss' approach to trading. If you're ahead in the day so far, stop trading because you might blow away some or all of it. You cannot make yourself rich with any such approach. Ultimately trading and in particular day trading a futures market is about precision (or if not its about as much precision as you can muster). Let me illustrate. A methodology needs to supply your triggers for trading; thay have to be reliable (or stop and learn more until you do have triggers which are reliable). Now you have each day price gyrations open to close which give you your days sequential swings. You want to take net gains from those swings. Take for example CL on Friday April 1, 2011: 8 swings at a mean average of 86 points per swing (minimum of 40 points per swing). They were sequentially, open to close, down 145, up 71, down 80, up 163, down 68, up 50, down 41 and up 71 points. Maximum points offered on the days session: 689 points. From the days price gyrations therefore, your system should show you your triggers to buy and sell; they can be a fast trigger as well as slower triggers. Or you may simply have only one type of trigger depending on how much you have learned. But if you don't know the metrics of your market or you don't want to know the metrics of your market, you can carry on shooting from the hip. It won't make you rich!
I might not have been clear enough in my earlier post. Going back to my previous example, once you go from 50K to 55K, you only trade 53K, but you don't stop trading. If you make another 2K along the way, you continue to trade only 53K, with 4K "reserved". On the other hand, if you lose 5K while trading only 53K, your total balance would be 55 - 5 = 50K, which is what you started with, so you continue to trade with this 50K until you hit your daily limit. Basically, the idea is not to stop trading once you hit your profit target, but rather put a limit on your power buying power.
I learned long ago, it not about the money during trading, it is about being profitable at end of the day that makes the account go up. Plus, I enjoy the day much better when my size goes down, less strain on old ticker, can look out the window when a trade is on or hop on the treadmill, quality of life. One of my main problems way back when, constant volume trading at same size all day long produces my brain to tire and more chances of mistakes. I think once you up to a three lot, cut back, you not going to get rich over night, as the account grows, add more size. Also, say you trading 100 lots of Crude, you don't think it better to have a goal then cut back to 20 lot? Maximum points offered is certainly not in the pocket and crude oil is certainly not a happy market on slippage, doing 100 lot in ES-very seldom get slip but I wouldn't ever think bout doing that size in crude, gotten several prices just doing a 10 lot.
I trade whenever I see an opportunity, when the returns are more than the risks involved. ie. arbitrage. Who cares how much I have made for the day, when theres a chance to profit, wouldn't not want to ?