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Should you have a set loss and gain for the day?
- Thread starter johnt1256
- Start date
if i'm willing to lose X$'s on any given day, my goal trading is to make at least 1/4X$'s but hoping to get to 1/2-2/3X$'s- with maybe one or two days a month equaling X$'s. it has worked for me well
max daily loss is a MUST. I used to give back weeks of profit just because I didnt have a daily loss in place. As for the max gain for a day, I disagree with that one. If you have an edge, it should be put to use whenever the situation occurs. In Market Wizards there was a fund manager that was up 100% on the year and considered booking the year, but a friend convinced him to keep going and he ended up over 400% for the year. Trading is mentally easier when you have already made decent money.
Loss, yes...Gain, no.
When you are new you want to stay in the game long enough to learn how to extract profits. If, in your inexperience, you blow out your acct too quickly, that may be the end of it. Takes time to learn.
At the same time, having a daily goal to the upside puts your focus on the money and not "trading well". If you trade well, the money will come so no sense on focusing on the end result but rather the process.
When you are new you want to stay in the game long enough to learn how to extract profits. If, in your inexperience, you blow out your acct too quickly, that may be the end of it. Takes time to learn.
At the same time, having a daily goal to the upside puts your focus on the money and not "trading well". If you trade well, the money will come so no sense on focusing on the end result but rather the process.
Quote from johnt1256:
Should you have a set loss and gain for the day and once they are hit or achieved walk away?
Quote from johnt1256:
Should you have a set loss and gain for the day and once they are hit or achieved walk away?
The only way to limit fear is by using and honoring stop losses on every trade and for every day.
And the only way to limit greed is by using a profit target on every trade and for every day.
Using loss/gain limits for the day is a good way to reduce the emotional volatility of trading.