Daily Targets

A

AFX

Hi All,

I was hoping some of you experienced day traders out there could shed some light on a question I have.

Do you think it is important to have daily targets and stops.

So for example lets say you have a total daily stop loss of 2% asuuming you were taking lets say 0.5% risk per trade. This way you wouldn't compound errors and bad trading.

Then at the same time have daily profit targets so lets say when you get to 5% you stop traading no matter what time? This would then hopefully stop you giving back profits.

Is there any weight in an approach like that?

I look forward to your responses.

Thanks
 
I trade systematically and have tested one intraday edge in simulation for the two alternative cases of a) stopping at a daily target, and b) continuing to trade until the closing bell.
The results suggested that if you can pick an appropriate daily target correctly, you can do slightly better with “a)”. But IMHO the benefit is marginal, and it all depends on you being able to pick the daily target correctly.
One school of thought would say that it’s best to keep trading until the bell as there are days when your edge will be really in tune with the market, and you need those big winning days to come out ahead overall.
 
Quote from AFX:

Hi All,

I was hoping some of you experienced day traders out there could shed some light on a question I have.

Do you think it is important to have daily targets and stops.

So for example lets say you have a total daily stop loss of 2% asuuming you were taking lets say 0.5% risk per trade. This way you wouldn't compound errors and bad trading.

Then at the same time have daily profit targets so lets say when you get to 5% you stop traading no matter what time? This would then hopefully stop you giving back profits.

Is there any weight in an approach like that?

I look forward to your responses.

Thanks
More...

The stops will keep your powder dry. Having profit targets will limit your overall ability to make money.
 
From a mathematical perspective and using a mechanical system, it does not make sense to stop trading until the session is over. That much is obvious right?

But for a discretionary day trader, the ability to trade at a high level is not easily sustained for one complete session.

If you are a new trader, I think it makes sense to protect profits and continue trading the market in simulator if you are up a reasonable amount of money. As your experience grows, your daily take grows.

Know yourself and use discretion. :)
 
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