Daytrading the whole session versus calling it a day after reaching a profit target?

[Howard]

Hi all,

I’m having some difficulties with consistency in my trading. Now, that may have many reasons of course, but I’m considering if it would be beneficial for me to implement a daily modest profit target and calling it a day after hitting that.

After hitting that target, I could still trade the session in simulator or 1/10th the size and continuing to learn/improve.

I know that ideally, you should trade all your signals and maximize what your method/market offers, but equally, I think there are arguments for profit targets too.

One being that there is a finite amount of good trades on any given day.

The other being that trading can be mentally/physically demanding and that top performance is hard to sustain over time.

In time, I hope to trade the entire session, but I wonder if this would be the right approach for me going forward from here.

By the way - I have been in contact with a few traders over the years who actually did this. One of them even had a profit target as small as one ES point and he would call it a day after that regardless. He did trade size and as such made a decent return doing it.

Thanks in advance for any comments or suggestions.

Howard

 

[Howard]

A subset of this question is each single trade. I’ve become a bit greedy lately and allowed quite a few decent winners turn into BEs, small profits or even losses, trying to catch the big ones.

 

[Real Money]

You could just get small. Do your thing, then when you 'hit the target' just trade 1 lots, index spreads, or micro's.

I think rate futures are the shit, so that would be my suggestion. You can trade ultra bonds, bond spreads, synthetic portfolio (rate+index), and rate/index spreads.

 

[Baron]

The other being that trading can be mentally/physically demanding and that top performance is hard to sustain over time.

Your brain makes up 1/ 50th of your body mass but consumes a staggering 1/ 5th of the calories you burn for energy. Most of your trading decisions are happening in your prefrontal cortex, the part of your brain responsible for focus, handling short-term memory, solving problems, and moderating impulse control. It’s at the heart of what makes you human and the center for your executive control and willpower.

In 2007 researchers did a study where they assigned tasks that did or did not involve willpower and measured blood-sugar levels before and after each task. Participants who exercised willpower showed a marked drop in the levels of glucose in the bloodstream.

Another study was done that involved two groups. Both groups completed one willpower-related task and then did another. Between tasks, one group was given a glass of Kool-Aid lemonade sweetened with real sugar (buzz) and the other was given a placebo, lemonade with Splenda (buzzkill). The placebo group had roughly twice as many errors on the subsequent test as the sugar group.

So what we can learn from this is that willpower is a mental muscle that doesn’t bounce back quickly. If you employ it for one task, there will be less power available for the next unless you refuel. That's why you can start off the day making good trades but then eventually see your decision-making ability and discipline go right out of the window later in the day.

To maintain a high level of critical decision-making ability for the entire trading day, you literally have to feed your mind, which gives new credence to the old saying, “food for thought.” That means you'll need to avoid rapid blood sugar drops by consuming 5 - 6 small meals throughout the day, and the foods you eat should elevate blood sugar evenly over time, like complex carbohydrates and proteins.

 

[Sekiyo]

If you cap your upside you will underperform.
If you limit your setup ... you’ll just iterate less.

Orange line is SPX capped @ 3% gains.
Green is 2/3 SPX returns picked at random.

 

[KCalhoun]

Great topic... in doing thousands of trades this past year I've found:

+ the single best way to trade is intraday swing trading

Buy open range breakout by 10am and use a trailing stop on half position and hard stop just under premkt low on the rest, closing that between 3:30 and 4.

The whole idea of targets = epic fail. Use trailing stops.

Right re no late day decision making, I almost always fail if I enter after 11am.

Intraday swingtrades are best because no overnight gap risk plus you don't have to be so exact in timing orb/ opening scalps.

Classic daytrading 5 to 8 minute scalps is getting tough lately, shakeouts are frustrating.... small size for all day long trading works better. But you've got to use trailing stops on half position for when there's midday reversals.

 

[Clubber Lang]

I can’t stress enough how awful a “hit target and log off” strategy is.

There are times (like the last few weeks) where you can make a month or year of “daily targets” in one day.
Conversely there will be days in July and August where you will be wishing for anything on your screen to be moving.

Make hay while the sun shines.
Good luck

 

[SanMiguel]

Usually enter trades between 930-11, morning during lunch, then I look again about 230 onwards.
But I trade discretionary so it's better suited for profit targets.
If you were using a complete technical based system then you have to take every setup.
My most profitable trades are in the morning session, my most losses during lunch or afternoon so I cut out most of that

 

[Trade Theory]

I don’t set a daily profit goal if I’m daytrading. I usually trade the first 4ish hours of the trading day and stop around lunchtime chop. Price action is significantly different in the morning as it is into the close. Trends seem to break and consolidate toward the latter half of the day as traders are covering their trade and the trend starts to fade. If the day isn’t trending in one direction, I typically won’t daytrade at all and focus on options trading instead.

 

[birdman]

For me, i like the ideal of stopping once a target is reached. However, i often fudge and trade longer as i like to trade for at least the first hour.

I prefer to only trade the first 90 minutes. Most times i hit my target before 60 minutes and many times before 30 minutes.

Sometimes, if i don't have anything else to do, i will come back around mid day and screen for movers. Most of the time i can find something else to do.