Target Setting

[Tim 1]

Hello all! I'm working to refine how I set targets and was hoping to see how some people go about this.  I have found that I have been setting targets that offer a great r/r ratio but maybe are unattainable.  I tend to use daily levels especially 50 and 200 SMA and recent obvious support and resistance levels for target setting.  There are times when I cover/sell with minimal gain to lock in some profit, and try to hold a portion of my position to my target (sometimes successfully but not always of course).   What are the target/stop setups that you prefer?  I realize that it is situational and trade dependent, but looking to see how different people might analyze the chart and if there are setups that you really like.

[Robbie Williams 12]

Tim - I was literally thinking the exact same thing after trading today. I have noticed that I’ll enter a trade with a 2:1 ratio but I’ll find the stock doesn’t move up to the level which was predicated on that ratio and I’ll only book a marginal profit when the price action looks like I’m not going to be able to attain that level. When I’m identifying my profit target, I’ll usually just pick the next level on my chart whether it was a pivot identified in the pre-market or a moving average from the daily chart so I don’t think I’m being unreasonable in an unrealistic target but I feel like I’m having the same issue as you.

 

Would love to hear someone’s 2 cents on this issue too :)

[Carlos M. 232]

Hey guys,

 

This has happened to me as well several times. I set a target and in a lot of cases the price action does not reach it. Now I do keep in mind, what Andrew has explained in his class and recap videos, the Target is an area not a set price. What has helped my trading a lot against this is the scaling out of a trade once it has moved .30 to .40 cents or so regardless if it has reached the target depending on how the price action is going. If the stock is moving really fast towards my target then I let it ride, the second I see some hesitation in momentum or any sign of a pull back I take some profits off the table. This way I got some green in my pocket but still have some left incase the stock decides to continue towards the target.

 

Too many times have I let a stock go against me for being stubborn and waiting for my profit target to get hit. We are not doing anything wrong by having a reasonable target that does not get hit. Is just the way the market is, you never know what will happened we just need to be prepare for what it does and check the price action for what signals we are getting.

 

Carlos

 

 

[kkoskela 2]

I really agree with Carlos M. on this one! Using MU as an example, I often buy 1000 shares, with a profit target of around 40 or 50 cents, usually yesterday's high/low, 2 days ago's high/low, or previous days' close. My stop loss will be anywhere from 10 cents to 20 cents below my entry point. Usually a few cents below VWAP or another strong support level.

 

I generally will sell the first half at around 30ish cents, another half at 35ish cents, another half at the price target of around 40ish-50ish. Leaving the last 125 shares to sell when the stock starts to look weak again. A lot of this depends on how the price action looks. If it look strong, I may hold a little longer. If I'm skeptical, I may get out a little sooner.

 

I'm still using a simulator. But, I have found this strategy to be more profitable than what I was doing before. I'm really interested in hearing other's opinion on this!

[nassarsyed 82]

Agreed on the price action negating profit targets. I sometimes also use the same price action to ‘scratch’ a trade if order flow or action does not seem ‘right’ before hard stop target.

I think there is no other way, I believe that of 5 trades if we hit 1 at full Risk, 1 at full Reward or more and the interim at small profits or scales or scratches, our overall profit factor and win rate will give us that 2.0 return at 55-60% winners. 

Holding on to the hard Risk or Reward target will not work and should be deemed initial ‘targets’. 

Again, I am just a beginner and these are my current thoughts and belief system. I am only trading on a SIMM. 

Edited June 10, 2018 by nassarsyed