Further rantings:
I must insist on a set daily limit, but hey - that is what works for me! This method sets a REAL goal, and allows you to be both aggressive, and defensive on the way up or down.
The net psychological effect of this profit target is that you will focus more energy, be more defensive, and basically fight harder to get to that point - because it is your goal. The problem with trading after the goal is met is that you run the risk of not taking any of the following trades seriously, because you are up on the day.
Anyway, once the profit target/goal is met (regardless of all of the hope n' pray/coulda/shoulda/woulda questions asked earlier), it is really difficult to quit - really difficult (believe me), but this is where your discipline needs to be strengthened.
Prior to this limitation, I would feel so great about my up day that I would jump right back in the markets, and usually work may way back down toward net-zero for the day (or worse). Again, with goals met, trading becomes more relaxed, less-worried/less-hurried, which makes you a dangerous trader. Sure stops help, 'cept I got the old puddle jump today on a fill, on a big, old super-liquid rhino, so don't say stops will save you. Watch for all of the posts that come in saying "Oh, I can do it without goals or a plan; I can trade all day, every day, and profitably". Yeah right!
This is why I firmly believe in trading the plan.
To respond to the earlier flap: my beginning initial target (back in the day) was $100/day, then as things progressed it was $250/day. When $250 was set, I was easily hitting 4X that. So I eventually bumped the target up to $1k/day, and started doubling that. But, the $1K stays, like it or not, regardless of how I do - until my account size is enough to withstand the blows of the sideways, lo-vol market days that I think are coming in early 2006.
To everyone - think of all of those days when you said "if only I would have gotten out earlier". Hindsight, the world's greatest attaboy - don't let this happen to you. Remember, the adrenaline of winning and losing money is the same rush - it pays you either way. Realize the difference, and do not "revenge trade" as MOREAGR said. You are giving in to the bad adrenaline, and you will lose to emotion every time.
The rise to profit targets/goals can be seen as a road trip of sorts: it is exciting to get there, but not so much if you have to come back unexpectedly, and your wallet is suddenly much lighter.
Moral of the story, quit while you are ahead! And if you do, don't ever say to yourself: "If only I would have stayed in . . . " Although I hate the gambling comparison, I gotta say: If you are going to quit while you're ahead in Vegas, do you just sit there at the table, with all your chips in front of you? Hmm?
