Hi I have read alot of how important it is to set goals on a daily, weekly, monthly basis but then I read and experienced how concentrating on the $ leads to losses and frustration, also when having a daily goal of x amount of dollars your exits are usually based on achieving these goals and not what is hapening in front of you.... What daily goals do most successful traders refer to when planning there trading day,week, month? Can anyone share some real concrete daily goals they use that helps them in trading. Thanks for the help.
Hi Ilcaa, I've posted this exact same scenario here about a year ago or so.. Having set daily goals myself I can tell you first hand that it can be a hinderance to your trading.. I found myself exiting many trades prematurely because I was so set on making my daily $ goal.. that once I hit it.. I would get out in fear of losing it back.. Also the oppositte would happen.. when it was late in the day and I hadn't met my goal I would put on mediocre trades that should have never been executed.. Its hard to get away from the $ target.. but to trade properly you have to concentrate on market behavior/action only. I'm still working on this but thought since I've been through this scenario I'd share my experience... Good Luck to you..
whats the point in setting daily money targets? is this acting in your own self interest by limiting the amount of money you can take from the market? try setting behavioural based goals. like: i will ALWAYS define my risk and have stops in the market i will ONLY take trades that meet my criteria 100% etc
Hi ilcaa, You need to know what level of trading those traders are that have said setting daily goals are important. First of all, unless your different, most losing traders should not be setting daily profit targets. It encourages them to stay in that losing cycle. Instead, they should set goals based on their ability to follow their trading plan or the ability to do something particular that they feel is a key to becoming a profitable trader. However, if you are a profitable trader...its ok to set profit number goals. Yet, the goal should not be based upon daily numbers. Weekly, monthly or quarterly goals is more suitable. Now...getting back to the issue of daily goals... Regardless if your a profitable trader or not, the ability to follow the trading plan should be at the top of the list. For me I have a daily ranking of my trading performance based upon a 5 star rating (5 star the best). Also, I measure my ability to follow the trading plan via a ratio based upon comparing the number of trades I took via the trading plan in comparison to the number of overall trades i took. For example...lets say I took 7 trades today and only 5 of them was via the trading plan (5 divided by 7)... Producing a ratio of 0.714 Then tomorrow I took 5 trades and 4 of them was via the trading plan... Producing a ratio of 0.800 This tells me my ability to follow my trading plan improved on the day I did such in 4 out of 5 trades in comparison to the prior day. Now...the above is just basic stuff for me. If you really want to...you can do it for each aspect of your strategy (entry strategy, stop/loss protection strategy, trailing stop strategy, profit target strategy and contingency plan strategy). I do the latter above whenever I'm using a new strategy that has gone from the backtesting/simulation trading stage into the real money trading stage... Doing such until the real money trading results are consistent and I'm happy with such results. Also, for trades that results as a loss...you can keep a ratio on the stop/loss protection strategy because its important to know if your sticking to the trading plan of not letting a small loss become a bigger loss. However, although I have a ratio as a daily goal...I mainly pay attention to my weekly ratio goal because the daily goal puts too much pressure on me in comparison to the weekly goal. In fact, I perform better when I follow the weekly goal in comparison to the daily goal. My ratio targets > 0.70 In all, the above isn't perfect and most likely not suitable for all... However, it works very well for me and the mathmatics is simple. Last of all, here's an additional trading tip. Start doing live-recordings of your trading session in which you record everything on your monitors (charting program, broker execution platform et cetera) via a tool like Camtasia. http://www.techsmith.com The ability to review your trading day any time you want...especially when you want to go back to a particular day when your trading plan goals weren't reached... The live-recording can be an eye-opener to see exactly how price action itself or what occurred that particular trading day that resulted in you not reaching your trading plan goals. Simply, the ratio measurement and Camtasia helps my trading a lot. NihabaAshi
The answer to the question is in your post. Having daily goals if you're not a profitable trader will just add more stress. Remove these goals. Focus on how you could loose less not how much you could win. Just my thoughts. Ludovic
interesting post na. i still dont see the point in forcing a daily $ goal though. you cant force the markets to give you $ if the $ just aint there. to do so could make a (new) trader discouraged. this i guess is why you suggest $ goals are no good for a newbie? also, the trader has to be aware of his abilities and set realistic goal in line with his expectancy or similar benchmark. as a side note, (and perhaps contradicting myself...) my approach which i found worked quite well was to set an easily achievable monthly $ target. i would break this down into daily targets. typically, these could be achieved with just one or 2 net winners a day. i would then be extremely careful as to if i would trade later that day. this way, i was making money, but also, not cutting myself off from the opportunity flow on good days - which we need to make up for the days/weeks when we may not achieve the simple goals for poor market (ie not OUR market), or poor trading (behavioral days. achieving simple targets was good for the confidence, the account, and the soul. from this position of strength, observing the underlying dynamics of the market became easier.
I completely agree. Newbie traders are more likely to be the ones to announce to themselves or to a public forum a specific dollar amount or average of some sort in relationship to daily, weekly or monthly profit $ goals. I'm sometimes a little perplexed to where they get these unrealistic info from because the books they said they've read do not talk about such. Only thing I can think of is that a newbie trader is getting these profit $ goals from another newbie trader... Blind leading the blind ??? In fact, I've seen more posts recently at ET this year alone in comparison to the past two years by new traders setting goals or asking about such based on $ dollar amount or worst via comparing themselves to those that have different trading styles, different strategies and different level of experience as a trader. As you relate your own goals... It ties into what I mentioned in the prior message. Only veteran or experience traders are suitable of handling profit $ goals especially if they are profitable traders. These types of traders know what they are capable of based upon historical trading habits. Thus, newbie traders don't have any historical trading habits to set realistic $ dollar goals... Besides...most of them are still making adjustments to their trade methodology making it too difficult to reach any $ dollar goals setting up a sense of failure. NihabaAshi
thanks guys, exactly the kind of insight and confirmation I was looking for, I trade alone and am a newbie so asking these types of questions to more experienced trader guides me. Thanks NA for taking the time to write that and everyone else who added input... My goals were based on achieving 20 ticks per day (5 pts) consistently for 5 days straight with 1 contract before moving to 2 contracts and I would repeat this with 2 contracts before moving to 3. So even if I would make 20 ticks for 3 days straight and the 4th day hit 15, I would start over looking for a new 5 day consecutive 20 tick streak with 1 lot before moving on, I would also track my win/loss %, my avg win and loss. Any thoughts on that sort of goal setting method, good or bad?? thanks..