Daily profit target

[Goobs]

Back in the day on the exchange floor when I was just a runner I used to talk a lot to the pit traders and was always fascinated by the rage of different approaches people took. (But I guess that's just the makeup of any market, the net sum of everyone's actions.)

One guy I knew that worked as an independent, had a daily profit target of £500 ( quite a lot of money back then) some days he'd be on the right side of the market and literally make his target in the opening minutes, he'd take his jacket off and get the train home! He said he would do it to keep the "demons" at bay.

So, I was wondering, does anyone here take this approach with trading the horses?

[Euler]

I think that mindset is still around in one form or another. Having a daily target can help keep discipline and stop you from giving profits back, especially when the temptation to keep trading is strong.

But I’ve found that it can limit you if the markets are good. Some days everything lines up perfectly and that’s when you want to make the most of it. Other days are slow and trying to force trades just to hit a number can end up costing you.

I focus more on the quality of their decisions rather than a fixed target. If you stick to your edge and manage risk well, the results usually take care of themselves over time.

[wearthefoxhat]

I wonder what his approach was to accepting a loss. Would he then say, "Ok, I lost £200 yesterday, I need £1200 today." (£500 not achieved previous day + £200 loss + £500 todays target)?

If he accepted the loss, and started with the original £500 target for the next day, then fair enough.

Maybe his real target was £100 a day, and the £500 target was a built in buffer for those losing days.

[Goobs]

I wonder what his approach was to accepting a loss. Would he then say, "Ok, I lost £200 yesterday, I need £1200 today." (£500 not achieved previous day + £200 loss + £500 todays target)?

If he accepted the loss, and started with the original £500 target for the next day, then fair enough.

Maybe his real target was £100 a day, and the £500 target was a built in buffer for those losing days.

I think from memory his loss limit was -£500, and he never changed that, he made a career out of it! Also, some of the guys used the in-house risk manager to help control themselves, they would be down max loss and get a tap on the shoulder, with a "come back tomorrow". This helped a lot of them control revenge trading etc. Some people had the ability to control themselves others less so. The ability to take risk is a bit of a double edge sword at times...

[Goobs]

I think that mindset is still around in one form or another. Having a daily target can help keep discipline and stop you from giving profits back, especially when the temptation to keep trading is strong.

But I’ve found that it can limit you if the markets are good. Some days everything lines up perfectly and that’s when you want to make the most of it. Other days are slow and trying to force trades just to hit a number can end up costing you.

I focus more on the quality of their decisions rather than a fixed target. If you stick to your edge and manage risk well, the results usually take care of themselves over time.

I think the risk can be, if you make £500 at the opening bell, most people then instantly extrapolate that out over the rest of the day and think they could make £10k a day if they trade the entire session! When the reality is, most get overconfident in their abilities with an early win, then end up giving it all back and even at times booking a loss on the day...