When to stop trading for the day ?

T

tradingkevin

Hi,
I have always had a issue in regards to:
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WHEN TO STOP TRADING FOR THE DAY ?
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Can anybody share their rules on when they stop trading for the day ?
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- I personally have the following rules ( whichever comes first ) :

if i have take 3 trades for the day ( winners or lossers ) or
if I have achieved my + 20 pts profit on YM for the day then I
stop trading and go out to enjoy the day.


Those ruels have some positive and negative:

Positives:
- it structures my day a bit ( otherwise you can trade 12 hours a day and over trade )
- It gives me a lot of freedom ( I can be done working for the day in 3 hours or 10 minutes )
- it stops me overtrading

Negatives:
- Limits my profit potential...( if I continued trading I could make maybe 2x to 3x more during the day in a trending market )
- Maybe the big moves will be during the time I justed stopped trading.

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Can anybody share their rules on when they stop trading for the day ?
Comments, ideas, suggestions are very welcome ?
( I always try to improve my plan and we need to pick each others brain for that ... )
 
I think it is a personal thing when to stop trading. The main thing when you trade is to be involved 100%. If you feel like not trading or you feel relaxed then better dont trade. it is my personal opinion of course. for someone else it might be different
 
Quote from gnome:

The notion of "time of day to stop trading" is riduculous.... trade setups when they occur.
More...

totally agree. Like someone says (can't remember who), "no tickie, no tradie". if there is no setup, there should be no trade. period :)
 
I have researched intraday volatility in the E-mini S&P 500. I wrote up an article that was published in August 2003 in Active Trader magazine. It was called “What’s the time”. I reviewed 10-minute bars for the first quarter of 2003. The research showed what most experienced traders know and that is the market is more volatile in the morning (the largest average range was the 9:00-9:09 bar, Chicago time), tapers off during noontime in Chicago, and then the average ranges expand going into the latter part of the session. While the research is four years old, I have not noticed anything different. So, this is something to keep in mind. I plan to do an update of the article.
 
I dont trade futures..only stocks and I have found that by lunch I either close out my positions or put in stops and go about my day.

Several reasons why

- I dont have the patience to sit in front of a computer all day when the sun is shining and my convertible is calling

- I run two small businesses

- 9 times out of 10 the morning is way more volatile with larger swings than the afternoon

- The reversals in the morning are usually way more obvious and easier to play
 
Quote from gnome:

The notion of "time of day to stop trading" is riduculous.... trade setups when they occur.
More...

This is not true at all. Maybe in futures it is different (and I don't think it is), but in stocks there were key fundamental dymanics why the morning always seems so much better. The same setups hold a worse risk/reward ratio, sometimes one not worth it, so you have to find new set ups which rarely have a comparable risk/reward.

At the open, institutions are unsure of price action. There is more volatility, the reversals are more extreme and faster, price is uncertain. Around 11am, once the more speculative action stops, it calms down and the fragmented progs get to work. Now I used to trade some nice setups around lunchtime, but not on a consistent basis. Same for the afternoon, most of the times the price action was too arbed, it was more about volume and big sizes exchanging, rather than big moves.
There was a clear pattern of 9:30-11:30, 11:30-1:30pm and then the afternoon. Each had their risk reward, I personally found lunchtime having the best risk/reward but not as consistent, afternoon being the overall worst for everything and the morning being the most consistent for good risk/reward setups. This is obviously a generalization, not an absolute.

There is more than enough observation by many traders that for the last few years, mornings were the prime time and the rest of the day is not as good. For some, it's just not worth the risk to keep trading after the morning. May depend on the financial instrument, commissions, leverage, system, etc.

I think if you trade more than one instrument, then it should not be a real issue.
 
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