A question for pro traders. Profit targets or runners?

[Canados]

Hi traders,
I've been trading for years now with good results, but not good enough to become a real trader.

Markets spend great part of the time in ranging movements, and big moves are rare. So, it should be better to use fixed profit targets at 2 or more x risk.

I know the story "let the profit run" and it's ok, but what you can tell me from your experience? Do you use profit targets? Or do you trail your positions?

I often see nice unrealized gains eaten because the price returns to my entry price, and I'm asking my self... what if I used a profit target instead of hoping for a big winner?

 

[toolazy]

I was thinking same thing for long time and finally resolved.

I am quickly happy with my results. 2, 3 modest wins at account high make me happy and then stagnate for long time.

So I resolved I need to go for real big winners only. Have 17 scratches this year and balance -0.6 risk.

If I targeted smaller wins would have couple of risks + but probably have to go thru another 'I am good' disease that takes many month to cure & dip in balance.

Looks like that works for me as I am okay with the dynamics. No disease but this 2 large wins will come and will be happily decreasing size after that to preserve until cured.

So, it all depends on your personality is my view.

 

[slugar]

This is only on a demo but
I like to take one contract off at at pre determined price at let the 2nd run until I get a signal to get out.

 

[Visaria]

Profit targets initially. When you become more experienced, you MAY sense when to let the trade run.

 

[wrbtrader]

Quote from Canados:

...I've been trading for years now with good results, but not good enough to become a real trader...

That does not make any sense. If you've been trading for years and profitable...you're a trader. Maybe you meant you want to do it as your sole source of income and you're unable to make enough profits consistently to trade for a living.

Quote from Canados:

...Markets spend great part of the time in ranging movements, and big moves are rare. So, it should be better to use fixed profit targets at 2 or more x risk...

The key word you used above is should. Guess what, many profitable traders do not use fixed targets in an effort to capture bigger moves.

Consider this, you already know markets spend a great part of the time in ranging movements. You should also know that all markets don't do such "at the exact same time". Therefore, it's an easy solution to become familiar with different markets so that when one market is ranging...you''ll then trade another market that's trending to make it easier to catch a big mover. Simply, don't get married to one trading instrument. There are other pretty ladies out there.

Quote from Canados:

...I often see nice unrealized gains eaten because the price returns to my entry price, and I'm asking my self... what if I used a profit target instead of hoping for a big winner?

You gave no statistical info about how many times such occurs. If its a very small percentage. Don't worry about it. Yet, if such occurs at a high percentage...use profitable trailing stops and learn to recognize when the price action is doing such again so that you can close you're position earlier to lock in more profits instead of allowing it to return back to your entry price.

Its ok to use profit targets, I'm just not a big fan of using "fixed" targets and I'm not a fan of using the same fixed target for every trade or every price action as if the markets never change.

Far from the truth. Thus, one size does not fit all.

 

[Canados]

Quote from wrbtrader:

That does not make any sense. If you've been trading for years and profitable...you're a trader. Maybe you meant you want to do it as your sole source of income and you're unable to make enough profits consistently to trade for a living.

correct. I'm in the last phase from a "so so trader" to "trader".

Thank you for your reply

 

[kid.fx.cross]

put it on with a tight stop and never take a profit

I learned this from watching scalpers get wiped out. They traded for a tight profit with no stop. So I just did the opposite.

I trade a whole portfolio and only take a profit when the whole portfolio hits the target. Then I take it religiously, no matter what. I mean get completely 100% flat. Individually, I have seen many profits turn into a loss, and many average winners turn into staggering winners. But the whole portfolio just keeps plodding onward and upwards. (with very depressing drawdowns in between.)

and when I get flat, I just put the whole thing back on taking the other side (there is a fair amount of money management going on and I'm always spread to some degree)

that R:R is a losers game, yet for centuries somebody is always trying to make it a winning system

 

[volente_00]

Every trade should have 3 things predefined before entering

entry

exit

stop




By just blindly entering without an exit strategy for winners your risk to reward ratio becomes undefined.

 

[NoDoji]

When my main instrument's volatility declined severely a while back I ran stats on fixed targets vs technical targets vs flexible targets. The fixed targets had the best outcome over time. I trade a particular trend-following setup where I have a method of letting it run IF there's ample airspace above or below, but that's only one of a few setups.

I have strict entry rules, which gives me excellent control over my R:R. All of it is based on price action and intraday only.

If you run stats on fixed vs flexible targets you may find that there's really not a lot of difference, but for my trading mindset, ringing the cash register more often keeps the stress levels low.

 

[MarketAddict]

Quote from Canados:

Hi traders,
I've been trading for years now with good results, but not good enough to become a real trader.

Markets spend great part of the time in ranging movements, and big moves are rare. So, it should be better to use fixed profit targets at 2 or more x risk.

I know the story "let the profit run" and it's ok, but what you can tell me from your experience? Do you use profit targets? Or do you trail your positions?

I often see nice unrealized gains eaten because the price returns to my entry price, and I'm asking my self... what if I used a profit target instead of hoping for a big winner?

I think let your winners run cut your losers short is a little overrated for day trading.. For me i like fixed targets.. It's much easier... The best thing I can tell you is do some backtesting... Figure out on average how far the market goes up/down before reversing back to your entry level.. Lets say on average you can get 10 ticks on every trade before it will stop you out.. then 10 ticks should be your fix target..