What About Daily Profit Or Percentage Targets?
Strict daily targets or goals aren't advisable and can result in negative trading habits.
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We have a question here from Thomas, saying that we've mentioned before, in passing, that twenty pips or twenty points per day was okay for a whole on a day trade, and wanted to know, in our opinion, whether there is a certain amount of pips we hope to make per day, or are these types of expectations damaging.
This is probably one of those areas where it will come down to what type of trader you are, as opposed to having a hard rule that can be applied across the board for all traders.
Now there's nothing wrong with having targets as goals that you strive for. But for the most part, I have always found strict daily target or daily pip or percentage targets as damaging, like you said in your question, and having a set goal in mind, that you want to make each day can create some very bad trading habits, in my opinion.
For example, if you have a set goal of, let's say you want to make 20 pips per day, or you want to make half a percent per day or whatever it may be, now firstly, it can limit you in your expectations for potential trades and cause you to cut your winners short once you've reached that target.
So let's say we want to, we're selling, we're selling the S&P and you have a target for the S1 pivot, or let's say we bought this to the upside and you had a target for the R1. So if you reach that target and you take it off and you've reached your daily target, then that's obviously fine.
But the danger with having that daily percentage or PIP target comes in, when let's say you've moved halfway to your expected profit area, you're halfway there, let's say a roundabout here, and suddenly you see that, okay, I've actually made my daily profit. That little voice is gonna tell you, just take your profit here. Why wait out for that bigger move? And that's a real threat.
So you might not realize your full profit potential if you have that very strict target. Also, when you have set your profit target per day, when you have that set target of whatever it is, that you like to make. You are already assuming that you will hit that target in your subconscious, without leaving room that you might have a losing trade or losing day.
So subconsciously, psychologically, you wanna try and take as many trades as you can now because you've basically lost two days worth of targets. And that can be a really frustrating thing to do from a psychological point of view. And I know it sounds silly, but our emotions can play very strange tricks on us when we trade or when we place ourselves in a position of risk, willfully, place ourselves into a position of potentially losing money.
So for me, a daily target might be useful if you can assure yourself to have the target and stick to your trading plan, if you know that your emotions will not get in the way of you taking the entries where you should and taking them off where you should. If you can look at the market fresh each day and do that, then there's nothing wrong with taking or having a daily target. For me, there's another way of looking at a target, which is a lot more helpful or has been a lot more helpful in my own trading and that is having a daily risk target.
So that means instead of having a target for what you would want to make each day, you give yourself a very strict limit or target of what you are willing to risk each day, whether that is a quarter percent of your account or half a percent, one percent, or two percent, or whatever you decide you are comfortable with, you have that as your risk target per day, instead of having a profit target per day.
So you say that you allow yourself to take a quarter or a half a percent loss, and once you've reached that loss, you just stop. That way you're always limit yourself from doing silly things by risking more and more, once you've had a few losing trades.
For some traders out there, they don't have the same type of issues with their psychology like some of us do.
They can take five or six or seven straight losses and be as calm in the midst of that, like nothing happened and can continue trading like all is well and just execute their trading process perfectly. Now that's definitely not me. I have a problem controlling those emotions.
So having a limit in place, what I can always lean back on saying that I've reached that limit, stop trading, get out of the game, get your head clean, start tomorrow fresh. I need those types of limits to help me control those psychological challenges.
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If you find this content helpful, you’ll love Forex Source.
There’s a link below were you can learn more about it
https://bit.ly/2HFykNd
----
We interpret and explain price moves in real-time, 24 hours a day. Our team of analysts produce text, video and audio commentary.
You understand the markets and trade with confidence. Learn more at our website here: https://bit.ly/2HFykNd
-----
We have a question here from Thomas, saying that we've mentioned before, in passing, that twenty pips or twenty points per day was okay for a whole on a day trade, and wanted to know, in our opinion, whether there is a certain amount of pips we hope to make per day, or are these types of expectations damaging.
This is probably one of those areas where it will come down to what type of trader you are, as opposed to having a hard rule that can be applied across the board for all traders.
Now there's nothing wrong with having targets as goals that you strive for. But for the most part, I have always found strict daily target or daily pip or percentage targets as damaging, like you said in your question, and having a set goal in mind, that you want to make each day can create some very bad trading habits, in my opinion.
For example, if you have a set goal of, let's say you want to make 20 pips per day, or you want to make half a percent per day or whatever it may be, now firstly, it can limit you in your expectations for potential trades and cause you to cut your winners short once you've reached that target.
So let's say we want to, we're selling, we're selling the S&P and you have a target for the S1 pivot, or let's say we bought this to the upside and you had a target for the R1. So if you reach that target and you take it off and you've reached your daily target, then that's obviously fine.
But the danger with having that daily percentage or PIP target comes in, when let's say you've moved halfway to your expected profit area, you're halfway there, let's say a roundabout here, and suddenly you see that, okay, I've actually made my daily profit. That little voice is gonna tell you, just take your profit here. Why wait out for that bigger move? And that's a real threat.
So you might not realize your full profit potential if you have that very strict target. Also, when you have set your profit target per day, when you have that set target of whatever it is, that you like to make. You are already assuming that you will hit that target in your subconscious, without leaving room that you might have a losing trade or losing day.
So subconsciously, psychologically, you wanna try and take as many trades as you can now because you've basically lost two days worth of targets. And that can be a really frustrating thing to do from a psychological point of view. And I know it sounds silly, but our emotions can play very strange tricks on us when we trade or when we place ourselves in a position of risk, willfully, place ourselves into a position of potentially losing money.
So for me, a daily target might be useful if you can assure yourself to have the target and stick to your trading plan, if you know that your emotions will not get in the way of you taking the entries where you should and taking them off where you should. If you can look at the market fresh each day and do that, then there's nothing wrong with taking or having a daily target. For me, there's another way of looking at a target, which is a lot more helpful or has been a lot more helpful in my own trading and that is having a daily risk target.
So that means instead of having a target for what you would want to make each day, you give yourself a very strict limit or target of what you are willing to risk each day, whether that is a quarter percent of your account or half a percent, one percent, or two percent, or whatever you decide you are comfortable with, you have that as your risk target per day, instead of having a profit target per day.
So you say that you allow yourself to take a quarter or a half a percent loss, and once you've reached that loss, you just stop. That way you're always limit yourself from doing silly things by risking more and more, once you've had a few losing trades.
For some traders out there, they don't have the same type of issues with their psychology like some of us do.
They can take five or six or seven straight losses and be as calm in the midst of that, like nothing happened and can continue trading like all is well and just execute their trading process perfectly. Now that's definitely not me. I have a problem controlling those emotions.
So having a limit in place, what I can always lean back on saying that I've reached that limit, stop trading, get out of the game, get your head clean, start tomorrow fresh. I need those types of limits to help me control those psychological challenges.
-----
If you find this content helpful, you’ll love Forex Source.
There’s a link below were you can learn more about it
https://bit.ly/2HFykNd
