Daily profit targets - Good or Bad?

obviously the losers take out the winners so stop losses need to be tight on these short term trades

craigj said:

sam

in a couple of newby posts i suggested trying to make $200 in a day

i wouldnt suggest closing the trade every time if the momentum is strong and buy orders are outnumbering sell orders allow the price to run further until sellers start coming in

if you run the $200 concept in conjunction with other trading and make 3 $200 profits a week it will have a serious boost to overall profit in the year

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yeah, I agree with tech on this one. have to think about the losers, I would rather concentrate on the losers than on the winners, having least amount of risk is number 1.

thanks for the discussion everyone, its made certain things clearer, I'm not biased one way or another, as I said there are plusses to both sides I think.


now. for something a bit off topic, rather than starting a new thread I thought I might as well post in here again.

ATR. average true range, does anyone use this? I want to find out the average true range of stocks, say top 10, 20 etc but in percentages, not cents, so its relative to each stock and a more realistic indication of volatility. I don't want the indicator that plots on the chart, I want a table setup where I can run a scan and check the highest/lowest 10/20/50 stocks with the highest/lowest volatility, on average.

does anyone know where I can get this? I found this http://www.istockanalyst.com/article/viewarticle/articleid/2440310

which is what I pretty much want, I have ninjatrader and Investor R/T here so I can code in both of those I think, does anyone know if that code will work in either of those apps?

cheers big ears

Greetings all --

The comments and opinions are all over the map -- here is mine.

In my opinion, whether to use a profit target or not depends very much on the characteristics of the system and the trades it produces. A system that trades frequently -- several times a week or more -- will probably benefit from using profit targets. Design your trading system with the code for the profit target isolated so that it can be tested independently from the other exits. To have statistical validity, the profit target should be the exit used by enough trades to allow testing whether use of the target improves the system or not.

Stops are another story. I differentiate between a maximum loss stop and a trailing exit, such as the parabolic component of the SAR system or the chandelier exit. The initial exit price is placed far enough below the entry price (for a long trade) so that the exit is not often hit due to normal fluctuation in the price. Trailing exits work well with trades that last long enough for the trailing part to catch up to the trending price. That can work intra-day using short time bars, or it can work on trades that hold a week or more using daily bars. But trailing exits need several bars before they become effective -- otherwise they are simply maximum loss stops.

Systems should be designed so that maximum loss stops are there to (hopefully) prevent total loss of funds if there is a meltdown in price. But if the maximum loss stop is hit regularly -- say more than 10 or 15% of trades -- testing will show that at any level it is set, maximum loss stops hurt the performance of systems. It is much better to use an exit that is designed into the logic of the system as the primary exit.

Thanks for listening,
Howard