Daily Profit, Daily max Loss

[Mohamed Omar 0]

Hi BBT,

I have a problem with my daily goal and my daily max loss, I'm not able to find a way to make this work.

They used to be :
Account 5000$
Daily goal : 1% (50$)
Daily Max loss : 3% (150$)
Risk per trade : 1% (50$)

And It wasn't working because if I had 4-6 max loss in the month I would be Red for the month.

This is what i'm doing now :
Account 5000$
Daily goal : 5% (250$)
Daily Max loss : 3% (150$)
Risk per trade : 1% (50$)

But the problem is when I'm green but not at 5%, I continue to trade (over-trade) and lose all the money I made.
What should I do ? Should I stop at 2% profit ? 3%? 

And how do you guys know when to stop trading for the day? (I always stop when I hit my daily max loss).

Thank you

 

[rom30 15]

Mohamed,

Just because you decide to increase your Daily Goal to 5%, it doesn't mean it will happen. What is happening is that you are trying to force your trading day to this 5% goal and possibly taking riskier trades, thus you end up losing.

Have you considered that maybe 5% is not realistic for you? Your initial Daily Goal/Max Loss/Risk per trade is probably more realistic to achieve. 

Like, I said you are probably taking risky trades which lead to losing most of the time you enter. I would focus more on how you are selecting the trades to enter. Are you getting the right entries? are you getting in/out too soon or too late? If you keep a journal of you trading days, go back and review what you have done. Find the source of the issue and make a plan to address the issue.

I had the exact same issue at the beginning. What I do now is every morning before trading, I write a list of 4 or 5 things that I want to do during the trading day. I keep the list next to me when I am trading as a reminder of what to do or not do. At the end of the day I look at  my list and on each item, I write how well I did in against that item.  Over time these items become normal things to do and I won't have to write them down.

Here is an example of a list:

- Wait 10 minute before I start trading

- Only enter trades based on levels & known setups

- Only enter a trade on a pull back

- Exit losing trades quickly once the max loss per trade has been reached

- End my trading day when of of the following happens: Made at least 1%, hit max day loss, it is 12:00 PM on the market clock.

 

[Robert H 453]

Having a daily profit goal early in your trading career can have negative consequences. You may feel the need to press, chase, trade the whole day, etc.

Your goals should be based on execution, psychology, rule adherence, making improvements etc. Similar to what @rom30 mentioned above. Treat your daily goal and max loss as stopping points for the day.

That being said, a goal of 0.5% to 1% a day is usually recommended for early in your career. 5% is unrealistic. It also makes sense that your daily max loss is no more than your daily goal--a losing day should not wipe out a winning day.

Here are the numbers I used when first going live:
Account: $2500
Daily goal : 1-2% (25-50$)
Daily Max loss : 2% (50$)
Risk per trade : 1% to 2% (25-50$)

If you risk 1% on a 2:1 setup that hits, then your day is over (one and done). Sometimes you end up with a few small winners and losers that put you black, small green or small red. It's a good habit to evaluate yourself throughout the day and know when to throw in the towel. Sometimes the market isn't tradeable, while sometimes the issue is with ourselves. For beginners this distinction is very difficult to make. So best to bench yourself.

Cheers.

[Mohamed Omar 0]

11 minutes ago, rom30 said:

Mohamed,

Just because you decide to increase your Daily Goal to 5%, it doesn't mean it will happen. What is happening is that you are trying to force your trading day to this 5% goal and possibly taking riskier trades, thus you end up losing.

Have you considered that maybe 5% is not realistic for you? Your initial Daily Goal/Max Loss/Risk per trade is probably more realistic to achieve. 

Like, I said you are probably taking risky trades which lead to losing most of the time you enter. I would focus more on how you are selecting the trades to enter. Are you getting the right entries? are you getting in/out too soon or too late? If you keep a journal of you trading days, go back and review what you have done. Find the source of the issue and make a plan to address the issue.

I had the exact same issue at the beginning. What I do now is every morning before trading, I write a list of 4 or 5 things that I want to do during the trading day. I keep the list next to me when I am trading as a reminder of what to do or not do. At the end of the day I look at  my list and on each item, I write how well I did in against that item.  Over time these items become normal things to do and I won't have to write them down.

Here is an example of a list:

- Wait 10 minute before I start trading

- Only enter trades based on levels & known setups

- Only enter a trade on a pull back

- Exit losing trades quickly once the max loss per trade has been reached

- End my trading day when of of the following happens: Made at least 1%, hit max day loss, it is 12:00 PM on the market clock.

 

Hey Rom,

Thanks for your response.

Yes I feel that 5% is too much, because I risk 1% to make 2% so I need 2-3 perfect trades to make 5%, so that makes me trade when I souldn't since I don't trade after 11:30 am. So I feel rushed.

But again if my dialy goal is only 1% and max loss is 3%, let's say there is 20 trading days in a month : 

14 win days : 14%
6 Loss days : 18% 

So I will be negative for the month, even at 16 winning days I will almost break even. Any sugestions?

OK I will start make a list to :)

Thank you

[rom30 15]

Omar,

You may want to consider making your daily loss 1% or $50. Think of it this way: Every day you are risking $150 to make $50. In the long run this risk to reward ratio will not lead to wins.

 

[Mohamed Omar 0]

7 minutes ago, rom30 said:

Omar,

You may want to consider making your daily loss 1% or $50. Think of it this way: Every day you are risking $150 to make $50. In the long run this risk to reward ratio will not lead to wins.

 

Sorry I'm not sure if I get it ,  1% daily loss so if I risk 1 % per trade if I lose on 1 trade I stop for the day ? what will be my daily profit ?

Thanks

[Mohamed Omar 0]

33 minutes ago, Robert H said:

If you risk 1% on a 2:1 setup that hits, then your day is over (one and done).

Hi Robert, 

Thanks for your response. 

So should I risk less than 1% on my trade (0.5%) ?
with a daily goal : 1-2 %
Daily max loss : 2% ?

I just wanna make sur that these numbers make sense , just to focus on improving my trading , because with my 1% daily goal and 3 % daily max loss I was never profitable, even with a 70% win rate.

Thanks 

[rom30 15]

You can manage this by reducing your per trade loss to say $20. In order to achieve this you may have to take a smaller size per trade. Also, you will have to be very selective on which stocks to trade. You don't want to trade a stock that have big price changes in the 1 min candle. For example trade 100 shares of a stock that is $30. If the price drops to $29.80 get out with a $20 loss. But if this trade had a 1 to 3 risk/reward then it could go up to $30.60 and you would exit with a $60 win.

 

Edited December 5, 2018 by rom30

[Mohamed Omar 0]

2 minutes ago, rom30 said:

You can manage this by reducing your per trade loss to say $20. In order to achieve this you may have to take a smaller size per trade. Also, you will have to be very selective on which stocks to trade. You don't want to trade a stock that have big price changes in the 1 min candle. For example trade $100 shares of a stock that is $30. If the price drops to $29.80 get out with a $20 loss. But if this trade had a 1 to 3 risk/reward then it could go up to $30.60 and you would exit with a $60 win.

 

Ok thanks, Should I always risk the same amount of money on each trade ? 

[rom30 15]

It is probably a good idea. I personally do that on my trades and I think a lot of traders do. You have to stick to your predefined limits. Just because you enter a different trade, you don't change to risk limits, right?

If you decide to use $20 as a risk on a per trade, it should apply to all trades. This is the kind of discipline that you need to develop. 

I know what you are thinking. It is going to make it harder to find trades to take. Well, yes. But it will also make you better at selecting good trades and in the long run become a better trader.

[Mohamed Omar 0]

5 minutes ago, rom30 said:

It is probably a good idea. I personally do that on my trades and I think a lot of traders do. You have to stick to your predefined limits. Just because you enter a different trade, you don't change to risk limits, right?

If you decide to use $20 as a risk on a per trade, it should apply to all trades. This is the kind of discipline that you need to develop. 

I know what you are thinking. It is going to make it harder to find trades to take. Well, yes. But it will also make you better at selecting good trades and in the long run become a better trader.

I usually risk the same amount, if the stock go to my favor but still strugguling, I change my stop loss to risk less, and if it goes to 1:1 I take partial (0.33% of my position) and I move my stop to b-e. 
what do you think ? 

[rom30 15]

 

I think that if taking partials works for you keep doing it.  This is what Andrew does. 

With a small account it is difficult to make good use of partials especially in chunks of 33%. I think partials make more sense when you have a large account and taking large positions. I think that with your account size the two best strategies are:

1- Don't use partials. Just get completely out when you think is the right time.

2- Do a partial of 50% at predefined level (1:1 or 1:2) and then wait to see if the stock is moving in your favor or against then exit completely when you consider the right moment. 

Also, please note that taking partials is not mandatory in every trade. In some trades it makes sense to take a partials and in other it doesn't. It all depends on how the stock is behaving.

But if your strategy is working keep using it.

Some brokers charge a fee per each order submitted ,  in this case taking a lot of partial will result  a lot of fees that will kill your gains. 

But, like I said. If your current strategy to exit is working, then keep doing it. 

[Mohamed Omar 0]

16 minutes ago, rom30 said:

 

I think that if taking partials works for you keep doing it.  This is what Andrew does. 

With a small account it is difficult to make good use of partials especially in chunks of 33%. I think partials make more sense when you have a large account and taking large positions. I think that with your account size the two best strategies are:

1- Don't use partials. Just get completely out when you think is the right time.

2- Do a partial of 50% at predefined level (1:1 or 1:2) and then wait to see if the stock is moving in your favor or against then exit completely when you consider the right moment. 

Also, please note that taking partials is not mandatory in every trade. In some trades it makes sense to take a partials and in other it doesn't. It all depends on how the stock is behaving.

But if your strategy is working keep using it.

Some brokers charge a fee per each order submitted ,  in this case taking a lot of partial will result  a lot of fees that will kill your gains. 

But, like I said. If your current strategy to exit is working, then keep doing it. 

Perfect thanks for the advice

[Mohamed Omar 0]

On ‎12‎/‎5‎/‎2018 at 4:09 PM, Robert H said:

Having a daily profit goal early in your trading career can have negative consequences. You may feel the need to press, chase, trade the whole day, etc.

Your goals should be based on execution, psychology, rule adherence, making improvements etc. Similar to what @rom30 mentioned above. Treat your daily goal and max loss as stopping points for the day.

That being said, a goal of 0.5% to 1% a day is usually recommended for early in your career. 5% is unrealistic. It also makes sense that your daily max loss is no more than your daily goal--a losing day should not wipe out a winning day.

Here are the numbers I used when first going live:
Account: $2500
Daily goal : 1-2% (25-50$)
Daily Max loss : 2% (50$)
Risk per trade : 1% to 2% (25-50$)

If you risk 1% on a 2:1 setup that hits, then your day is over (one and done). Sometimes you end up with a few small winners and losers that put you black, small green or small red. It's a good habit to evaluate yourself throughout the day and know when to throw in the towel. Sometimes the market isn't tradeable, while sometimes the issue is with ourselves. For beginners this distinction is very difficult to make. So best to bench yourself.

Cheers.

Hi Robert,

I hope you are doing well. So I changed my daily goals and max loss like you said, for December it was really good, I ended up being profitable for the month for the first time in a 13 month
But for the month of January I really didn't perform well. I know that the market was very choppy, but still I shouldn't be performing that bad, I was wondering If I can send you my Journal, and if you can take a look at it and tell me if there is anything I need to change or adjust, especially when the market is choppy. If you can help me , please send e your email.

Thank you and have a good trading day  

[Robert H 453]

@Mohamed Omar Congrats on the green month!

Unfortunately, I'm unable to provide individual journal review at this time. I suggest you start a post in the Journals subforum and have other members/mods provide feedback. I can take a look as well.

Cheers and best of luck.