It, as well as many other resources, state one of the key aspects of a successful trader is the ability to set realistic targets for your trades.
So, in my case I hope to make 2% of my capital per day, ie, I start the day with �1000 and hope to finish the day with �1020, then the next day it’s 2% of �1020 and so on…
What I can’t find anywhere is what to do should I meet my target in the first 5 minutes of a days trading. Should I just stop trading for the day? Or should I stop, have a nice cup of tea, then restart like I’m starting the day from scratch, with a new target and a fresh “I’m not on a role, there is no such thing as a role; I’m merely following my rules correctly and will continue to do so” mindset?
Wendano gives a good answer. If the general rubric for your trading activity specifies a goal of 2% per day, this ought to be your [I]goal[/I], not your minimum. Flexibility and the ability to exercise discretion over how much you do or don’t trade in a 24-hour market has benefits and drawbacks - overtrading (quantity of trades, amount of time spent actively trading, trading past your goal) is one of the latter.
So, you’ve set a goal; and optionally, give yourself a number of hours of screen time in which to achieve it. But once you’ve achieved it, reward yourself by doing something else entirely. The potential for profit is limitless, but you’re a finite creature, so downtime away from the market is very important.
Different people will offer different perspectives on whether 2% compounded daily is consistently attainable in the first place.
Excellent, thanks for the replies - they give the answers I assumed to be true, but I wanted to check.
I’ve been following the 2% rule during my demo trading, but for the sake of experience I do continue trading once I make my set goal - I just try and imagine it’s a new day.
I have noticed though that doing this my trades suffer as, try as I might to avoid emotions coming into my entries/exits, I start attempting to influence the market with will power and deity worship
your goal is 2% but it doesn�t mean you are not allowed to let your profits run. if you reach your 2% day goal, don�t close your position, try a trailing stop so that way you could catch a few extra pips (who knows maybe more!) without risking your capital.
Good point: a trailing stop, or if your broker doesn’t make provision for that (and many do not as measure to combat scalping during periods of high volatility such as news releases), simply set a stop @ the point were 2% is assured and let the trade run, perhaps setting a take profit point as well. There are all kinds of ways to do this, but gasanvill is right: there’s no need to flatten your positions if you’ve got a good thing going. Lock in whatever it takes to achieve 2% and let the trade(s) go. Just don’t tempt yourself to sit back down again later when looking in on that trade and try for a bit more.
I think you might be jumping the gun here. Why not trade for awhile and see what you are capable of. Then set your goals from there, aiming for modest yet continuous improvement.
What if you are capable of making 2% a week, but never get to because you are trying too hard to make 2% a day. Wouldn’t that be a sad story?
I can see your argument here, but think that my time trading a demo account is best utilized aiming high at first, and then toning it down if I can’t quite make it - this just suits my personality.
I feel that having confidence and belief in myself will help me study harder and put more effort into developing my skills base - but if, after a few months I am not performing to the required levels, I’ll try dropping my target to 1.5% and see how that works out.
So far I’ve been hitting my goal early in the day, and this was what led me to ask whether I should stop for the day at that point or not. It’s entirely probable that this has all been a fluke, but my fingers are crossed it’s not
Well as long as you are willing to adapt to your results, that pretty much covers the concerns I was having.
Just out of curiosity, what amount are you willing to lose in a day to achieve the 2%? Meaning, what is the drawdown point where you would stop trading for the day?
If you dedicate yourself to only trade quality setups (however you define that), there shouldn’t be a limit to how many of these quality setups you can trade in a day. The trick and major concern is controlling your emotions on a trade-to-trade basis, especially when the time between trades could be very short. It’s this emotional fortitude that determines how long you personally need to recover from wins/losses, in order to put yourself in an objective state of mind for your next trade.
[QUOTE]I think you might be jumping the gun here. Why not trade for awhile and see what you are capable of. Then set your goals from there, aiming for modest yet continuous improvement.
What if you are capable of making 2% a week, but never get to because you are trying too hard to make 2% a day. Wouldn’t that be a sad story?
I can see your argument here, but think that my time trading a demo account is best utilized aiming high at first, and then toning it down if I can’t quite make it - this just suits my personality.
I feel that having confidence and belief in myself will help me study harder and put more effort into developing my skills base - but if, after a few months I am not performing to the required levels, I’ll try dropping my target to 1.5% and see how that works out.
So far I’ve been hitting my goal early in the day, and this was what led me to ask whether I should stop for the day at that point or not. It’s entirely probable that this has all been a fluke, but my fingers are crossed it’s not [/QUOTE]
Personally I see no reason you shouldn’t have a goal of 2% per day, I mean if your risking 1% of your account balance, i would expect a 2% return per trade (R:R 2:1).
Now you win some you lose some and it would be important to set a maximum daily drawdown point to stop at.
Some days you will meet your 2% goal and far exceed it and other days you will just never get there.
At lease it sounds like you have a plan and are then on the right path.
