Nothing to do. One salient point though. Have you wondered how often the word statement "nothing to do" crops up? Why should that be? Consider that we get long at 1300 with a target of say 1342. There should be an equation that says, given this price action and this amount of risk, and given these resistance points from here to there, this is how you should evolve your position from entry to profit target. something like an Efficient Frontier for position size I really don't know what the answer is. People will tell you, if you KNOW it is going to 1342, why wouldn't you put on your max position on at once at 1300, instead of some other fraction continuously during the life of the "trade"? I have no real answer other than to say that when risk is taken into consideration, it "feels" safer to have a maximum position on as we move away from our initial entry point (usually some S/R level) in the right direction. This is born out in experience, at least it does in mine. And if that is the case, maybe the correct strategy isn't to enter at all at 1300, but wait for the position to move somewhat in the right direction, then hit hardest there and do nothing until the PT is reached? It definitively doesn't feel like all entry points are the same. It is interesting that in the pages of ET, people will tell you that the exit is more key than the entry. This is something that I have pondered with no real progress in many years. To me, the entry is everything and the exit is brain dead easy, especially if you measure risk by how much time you are in the market. Anyway, just some random thoughts.
I am willing to give you a quantum leap in terms of your progress. Instead of explicitly setting the profit target, let the market tell you when to take the profit and exit. In other words, when you enter a position, your profit target should be the moon (or whatever the opposite of it in case of a short position). When the market conditions change, your system exits.
I think you are misunderstanding. Let me be more clear. Say a [swing] system tells you to get in long at 1300 and to exit at 1342. Say you have 10 total units to expose to the market and 10 units do not impact your own liquidity in this market. How do you enter and peel positions as the market dynamics unfold on a daily basis? Do you go 10 all in at 1300. Or do you go in say, 2 units at 1300, 5 at 1310, 3 at 1320, and 2 on pullbacks to 1320? What is the theory behind the adds and removes? See, the system doesn't say what to do in between A->B. And yet the market is telling a story all the way between A->B with fractal dimension...I understand that the system is blind to everything between A->B, but there may still be an optimal way to adjust a position. Perhaps it is just statistics since all points in between A->B are random entry/exit points as far as the system is concerned...Still, in a Laplacian-Bayes world as we get new information we may adjust probabilities...Should we even think in terms of units or dollar loss and utility functions? There is an [almost] infinite number possibilities...There was a giant thread on this on ET, but little or no math AFAIK.
BTW, some people will say that all this theory alluded to in the above post should come from the same logic that tells you when to get in and when to get out. I used to believe the same, but I don't anymore. There is an analogy with simple physics. Newtons laws of motion (LOM) are dynamical laws. On the other hand, the Second Law of Thermodynamics (SLT) must be adjoined to these dynamical laws to get a clearer picture of fundamental physics. They are not deduced from them. There is [may be] an analogy to the system that tells you when to enter and exit, and how to wager in between. I don't think they necessarily spring from the same fountain. It feels as if it should, but it may complicate more than elucidate. There may indeed be a more fundamental physics from which the LOMs and SLTs are both derived, for example when (Quantum Mechanics) QMs and (General Relativity) GR are joined together in some theory (M-Theory?), but we don't know what that theory is.
That's just it. You will never know with 100% certainty that it will go to your projected target. Therefore, does it make sense to put on a maximum position at the initial entry? One insight I had was that the average maximum incremental risk/reward per time is always right at the entry. That along with arcsine law properties are why you have that 'feel.' You are on to some good insights from my perspective.
What I was trying to tell you is that you should not have a profit target in the first place. More precisely, the position should be closed when the market changes in such a manner that your system interprets as no longer advantageous to hold the current position. The current equity in the trade should have nothing to do with the exit.
The system already does that, i.e., it doesn't have a fixed PT. Read above posts to see that. What I am alluding to is adding/removing to the position before that PT as the market evolves while we are still in the trade. Why not add on the way from 1300 to 1342, or wherever? What is the optimal way, if such a thing even exists.
The first element of economic intelligence spoken in this thread (with the exception of some comments by someone named nLtro)!!!!! Bravo!