How many trades to reach daily goal?

[JasonH 47]

1-2% return on equity is a commonly quoted goal for day traders. The question I have is, how many trades are you trying to achieve that with? i.e. Does each of your trades have the potential to return your daily goal? Or are you expecting to make many smaller successful trades in order to hit your daily goal?

This is an important question because it sets up your entire risk management plan. And of course it depends on the characteristics of the market, your playbook, and the types of movements your trying to catch (i.e. how much stocks can move before you are stopped out). If stocks don't move much relative to our daily goals, then obviously it would take more trades to hit our goals. Or we lower our daily expectations (i.e. if stocks moved less, then maybe day traders could only hope to earn 0.5% per day). However, I think we all agree that 1-2% daily goal is very achievable and there are dozens, if not hundreds, of opportunities every day with Stocks in Play that move 1-10%+.

So I'm guessing that in general, traders use stop losses that are a decent percentage if their daily goals. I recall Andrew said in his book to never risk more than 2% of your account on one trade. Personally, being live <2 months, my daily goal is still 1% and I use a stop loss ("R") of 1% of my account equity, and I'm usually going for 1:2 risk/reward ratio. I have no idea if this stop loss is too big or not relative to my daily goal...

How big is your stop loss compared to your daily goal? What have you seen other BBT mods or members using?

 

Edited July 25, 2020 by JasonH