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The
“Daily Goal” Dilemma
Yesterday’s consistency chart generated some good after-hours
discussion with respect to targets. In particular, a few asked me
whether, as an intraday trader, I have a daily income target.
My answer is a flat-out “no,”
and I strongly believe that having such a short-term goal is
highly counterproductive for a trader. For example, while I do
have longer-term weekly and monthly income targets, whether or not
I attain a daily “goal” or am even positive each day is
absolutely irrelevant, just as whether or not I’m profitable on
every trade is irrelevant and unrealistic.
While most folks seem
to be able to accept not having a per-trade objective, I find that
many still strive to attain some profit level every day and will
push at times when they’re unfocused, out-of-sync, or when the
market is more or less stagnant — as is typically the case during
many of the summer dog days. As Dave Landry said yesterday, “Why
fight it?”
In yesterday’s consistency chart, you’ll see that my target for
profitable days each month is around 75%, which may, at first
glance, seem low. Yet it is the monthly income stream that
is most relevant to me, and the 75% reflects that fact that I
expect to have drawdown days where the market fails to provide
high probability intraday setups, I’m not trading particularly
well, or technical problems occur, etc. In fact, I’ve found
higher % targets result in lower income streams as the result of
what I’ll call “trading on eggshells.”
One particular negative of having a daily goal is stopping for the
day once one reaches it. Doing so would result in the trade-like
error of inappropriately cutting one’s gainers, this time on a
daily basis, essentially turning the target into an earnings
“cap.” This month’s income distribution provides a good
example, using results vs. a daily average (not target) as
reference points:
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