Not convinced by targets.

[RedGreenBen]

There is a lot of sensible advice given to newbies in books and in this forum. It's the usual but vital stuff... money management, having a plan, concentrating on one or two markets etc. All of which I agree wholeheartedly with.

However, one of the common nuggets of advice that often appears at the same time is to "have a daily/weekly target" and this I struggle with (note that I am not saying it is bad advice, just that I am not convinced).

My feeling is that my only target should be to make as much money as possible within the constraints of the risk I am willing to accept. It seems inevitable that once you have a target then your behaviour will immediately become sub-optimal e.g. it would be a shame to achieve that 25 pip target on a Mon morning by closing what was the one trade for the week that (based on sound reasoning) should have been left open and made 200 pips. Why 'bust a gut' to try and make a target on a choppy day when it would be more prudent to step aside?

It seems similar to the (possibly apocryphal) tales of taxi drivers who work until they make a certain amount of money and end up working really long shifts all week and pack up early on Fri night when there is a fortune to be made.

Perhaps I have misunderstood what people mean by these targets, or perhaps it is a price worth paying for a bit of discipline, but thoughts would be welcome.

RGB.

 

[black bear]

me to

There is a lot of sensible advice given to newbies in books and in this forum. It's the usual but vital stuff... money management, having a plan, concentrating on one or two markets etc. All of which I agree wholeheartedly with.

However, one of the common nuggets of advice that often appears at the same time is to "have a daily/weekly target" and this I struggle with (note that I am not saying it is bad advice, just that I am not convinced).

My feeling is that my only target should be to make as much money as possible within the constraints of the risk I am willing to accept. It seems inevitable that once you have a target then your behaviour will immediately become sub-optimal e.g. it would be a shame to achieve that 25 pip target on a Mon morning by closing what was the one trade for the week that (based on sound reasoning) should have been left open and made 200 pips. Why 'bust a gut' to try and make a target on a choppy day when it would be more prudent to step aside?

It seems similar to the (possibly apocryphal) tales of taxi drivers who work until they make a certain amount of money and end up working really long shifts all week and pack up early on Fri night when there is a fortune to be made.

Perhaps I have misunderstood what people mean by these targets, or perhaps it is a price worth paying for a bit of discipline, but thoughts would be welcome.

RGB.

Hi RedGreenBen

good link at the bottom by the way

how strange, Split posted a thread and I answered your Question or gave mho of it

http://www.trade2win.com/boards/first-steps/30453-hourly-pins.html

late and off air in a momento so link above

Good food for thought

have a good week :clover:

 

[Paul71]

There is a lot of sensible advice given to newbies in books and in this forum. It's the usual but vital stuff... money management, having a plan, concentrating on one or two markets etc. All of which I agree wholeheartedly with.

However, one of the common nuggets of advice that often appears at the same time is to "have a daily/weekly target" and this I struggle with (note that I am not saying it is bad advice, just that I am not convinced).

My feeling is that my only target should be to make as much money as possible within the constraints of the risk I am willing to accept. It seems inevitable that once you have a target then your behaviour will immediately become sub-optimal e.g. it would be a shame to achieve that 25 pip target on a Mon morning by closing what was the one trade for the week that (based on sound reasoning) should have been left open and made 200 pips. Why 'bust a gut' to try and make a target on a choppy day when it would be more prudent to step aside?

It seems similar to the (possibly apocryphal) tales of taxi drivers who work until they make a certain amount of money and end up working really long shifts all week and pack up early on Fri night when there is a fortune to be made.

Perhaps I have misunderstood what people mean by these targets, or perhaps it is a price worth paying for a bit of discipline, but thoughts would be welcome.

RGB.

Yes. I think some traders talk in terms of the target for a particular trade, probably governed by SR for a certain TF.

Traders talk about taking profits too early, is this a symptom of not identifying the optimal TF for any given market. Maybe sometimes a daytrade is worth leaving? Regarding the traders preference of TF, how versatile should a trader be?

 

[nine]

Regarding targets it is typically better to use slightly longer term (say weekly) than shorter term to avoid the effect you are describing.

The value of the target is that unless you measure something you can't manage it and a target provides a valuable measurement. Also it provides motivation. And satisfaction if you reach it. And don't forget that overachieving a target is just fine too. IMO you should combine outcome targets (longer term) with process targets shorter term.

My name represents my trading target, Nine, which is the number of points I get for a perfectly executed trade.

Nine

 

[black bear]

Mad Bear

oh go on then one more post

I find I am pretty versatile if it does not go behind me more than once then I throw my toys out of the pram and accept far less

 

[0007]

There is a lot of sensible advice given to newbies in books and in this forum. It's the usual but vital stuff... money management, having a plan, concentrating on one or two markets etc. All of which I agree wholeheartedly with.

However, one of the common nuggets of advice that often appears at the same time is to "have a daily/weekly target" and this I struggle with (note that I am not saying it is bad advice, just that I am not convinced).

My feeling is that my only target should be to make as much money as possible within the constraints of the risk I am willing to accept. It seems inevitable that once you have a target then your behaviour will immediately become sub-optimal e.g. it would be a shame to achieve that 25 pip target on a Mon morning by closing what was the one trade for the week that (based on sound reasoning) should have been left open and made 200 pips. Why 'bust a gut' to try and make a target on a choppy day when it would be more prudent to step aside?

It seems similar to the (possibly apocryphal) tales of taxi drivers who work until they make a certain amount of money and end up working really long shifts all week and pack up early on Fri night when there is a fortune to be made.

Perhaps I have misunderstood what people mean by these targets, or perhaps it is a price worth paying for a bit of discipline, but thoughts would be welcome.

RGB.

My experience is that it's no use just setting a target plucked out of thin air (isn't that what unsuccessful politicians do?). I have an idea of what i expect to make from every trade - which i suppose is my target?). This is derived from my system (which includes various parameters and historic experience) and is essentially a probability-based estimate. Once achieved, I review the situation (as i also do on the way OR NOT to that position) and decide whether to let it run or not - again, all probability based because that is essentially what i'm dealing with.

I don't worry about targets other than as above where i consider it to be more an aid in monitoring my success or otherwise. For me - look after each trade and the rest looks after itself.

It's very important to note that this works for me & my system - I suspect that others might have different ideas. All that counts is to make your own system that works.

 

[Rhody Trader]

Personally, unless I'm specficially trading as my source of income (which I don't), then I wouldn't get too caught up in making X per week or month or whatever. That said, having an idea of what type of performance you should be seeing (based on performance testing statistics, of course) is something definitely worth knowing. That way, if you start seeing your performance fall well under (or even over) the benchmark, you'll know that something needs investigating.

 

[Crap Buddist]

I think traders (directional outright types) should eyeball what % of ATR (0) (which is the range from entry to exit) their result was. (will also highlight if the method approach is viable/in sinc or not) I mean trade if you want to trade and you see the trade, trade. whats a trader to do if not to trade ?

If the trader is not trading ,he's either not happy to trade, waiting to trade. Or being lazy and not trading He's probably being dragged around some shops feeling miserable and grunting at the latest shoe designs that mean so much...... you only need a pair of flip flops I think. (I've got a pair of the all terrain types, still going after 5 years )

I can understand the types who dont have a passion or a deep love for trading, yes ,then its best they pile in clear off and do what they enjoy doing in life.

So I can see the sense for them.

 

[0007]

.............
He's probably being dragged around some shops feeling miserable and grunting at the latest shoe designs that mean so much......

You only need 3 pairs: 1 on, 1 in the cupboard, 1 at the cobblers. ............and that's luxury!

 

[nine]

Just a further thought. When you test a system then statistically the minimum number of trades considered worth reviewing is 30. I don't recall why but 30 seems to be the number. I'm guessing that with 30 you have 95% confidence that the sample mean is within +/- 5% of the real mean.

So, whatever targets you set should be set for a period that is likely to include a minimum of 30 trades or you can't be confident that what you see is even likely to be meaningful.

 

[Mathemagician]

Unfortunately, 30 samples is nowhere near sufficient in all but the most clinical of circumstances. Trading return series violate nearly all of the assumptions that are at work here (independence, stationarity, normality, etc.). To see this, group your data into sets of 30 consecutive data points and compute your statistics on those sets. You will see wildly divergent results yielding completely different conclusions.

Even more unfortunately, when it comes to sample size in this arena more is better and there is never enough.

jj

 

[nine]

Which would suggest that any targets you set for outcomes with even 30 trades included in each sample are likely to be statistically invalid (they tell you next nothing about your actual performance).

So, I'd suggest that instead you set process targets. Did I enter right (1-3); Did I set stops, targets, etc correctly after the trade filled (1-3); Did I exit by my take profit/take loss system exactly (1-3)?

If you get each part absolutely right you score Nine.
If not, you have something to improve on.

 

[fibonelli]

The major problem having a daily target is that you are in the frame of mind of taking trades each day. You run the risk of taking marginal trade setups rather than patiently waiting for the high probability setups. Quality vs Quantity.

Annual and quarterly target ranges are far more important. You can then incorporate wide monthly and weekly target ranges to ensure you don't deviate too much from your longer period targets.

 

[Mathemagician]

Which would suggest that any targets you set for outcomes with even 30 trades included in each sample are likely to be statistically invalid (they tell you next nothing about your actual performance).

This is absolutely correct. Very good systems/methodologies can have bad years just out of sheer dumb luck, let alone days/weeks/months. Trying too hard to do too much with too little is a significant contributor to the failure rate.

jj

 

[black bear]

Time for a sit down

The major problem having a daily target is that you are in the frame of mind of taking trades each day. You run the risk of taking marginal trade setups rather than patiently waiting for the high probability setups. Quality vs Quantity.

Annual and quarterly target ranges are far more important. You can then incorporate wide monthly and weekly target ranges to ensure you don't deviate too much from your longer period targets.

Hi fib


I agree,

A donkey on your back making you think you have to do something


Time for a quote

One of the best rules anybody can learn about investing is to do nothing, absolutely nothing, unless there is something to do. Most people always have to be playing; they always have to be doing something. They can't just sit there and wait for something new to develop. I wait until there is money lying in the corner, and all I have to do is go over there and pick it up. I do nothing in the meantime. Even people who lose money in the market say, 'I just lost my money, now I have to do something to make it back.' No, you don't. You should sit there until you find something.

-- Jim Rogers

 

[RedGreenBen]

Thanks to all for the useful responses (and useful footwear recommendations ). I think I am happy with...

Personal (as opposed to individual trade) targets should be measured over a sufficiently long timescale that short-term natural variations in market behaviour do not skew the performance that is being measured.

In less grandiose speech, I think weekly targets are where it is at for me and probably for those cabbies as well.

RGB.

 

[Mathemagician]

Personal (as opposed to individual trade) targets should be measured over a sufficiently long timescale that short-term natural variations in market behaviour do not skew the performance that is being measured.

...I think weekly targets are where it is at for me...

These statements are incompatible.

jj

 

[RedGreenBen]

[/B]


These statements are incompatible.

jj

Depends on your trading style/time-scale and the balance between coming up with a sensible period and the theoretical need for an infinite amount of time to tune-out every last bit of variability. I think.

 

[Mathemagician]

No.

jj

P.S.

 

[RedGreenBen]

No.

jj

P.S.

I found your thoughts on N=30 very illuminating, this less so (although I admire hardcore brevity as much as the next man). Perhaps you could elaborate a bit?

RGB.