I'm sure a large share of us have a trading plan. I wonder how many set gain or loss limits for different periods of time. I'm not talking about striving for X number of pips per day.
What I mean is:
.....1) Do you only allow a certain predetermined loss per day? Week? Month?
.....2) Is it a monetary amount? Number of pips? Percentage of account?
I'm not asking about your own specific amounts. I'm more interested in your formulas and why you chose the limits you did. I'd give you my own but I don't have any. That's part of my motivation for asking--I'm trying to develop my own.
Often if my losses begin to mount, the wisest thing for me to do is step back for a while.
.....a) If I've been overtrading, usually a day or two away will break that cycle.
.....b) If I'm going through a period of sustained loss, I start becoming less emotionally fit to do this.
.....c) I never have enough time to do everything I want, so if I have to take time from trading, Id rather take it from a period that's going badly.
On the other side of the coin, and to me this is more difficult, do you ever shut down after a few exceptional trades?
.....a) There's something to be said for going to bed with a few nice gains banked and no open trades.
.....b) Courageous money can be almost as damaging as scared money. Though given a choice, I'll take courageous money any day.
This peels back another layer of trading psychology. If we believe in our system and are completely unemotional then winning or losing shouldn't influence us. But I think that kind of pat answer rarely illustrates real live people and the way they behave. I think part of being successful is inventing a few of our own personal rules and applying them where needed. But a certain measure of experience and expertise are needed first.
Anybody have gain and loss limits built into their plan?
What I mean is:
.....1) Do you only allow a certain predetermined loss per day? Week? Month?
.....2) Is it a monetary amount? Number of pips? Percentage of account?
I'm not asking about your own specific amounts. I'm more interested in your formulas and why you chose the limits you did. I'd give you my own but I don't have any. That's part of my motivation for asking--I'm trying to develop my own.
Often if my losses begin to mount, the wisest thing for me to do is step back for a while.
.....a) If I've been overtrading, usually a day or two away will break that cycle.
.....b) If I'm going through a period of sustained loss, I start becoming less emotionally fit to do this.
.....c) I never have enough time to do everything I want, so if I have to take time from trading, Id rather take it from a period that's going badly.
On the other side of the coin, and to me this is more difficult, do you ever shut down after a few exceptional trades?
.....a) There's something to be said for going to bed with a few nice gains banked and no open trades.
.....b) Courageous money can be almost as damaging as scared money. Though given a choice, I'll take courageous money any day.
This peels back another layer of trading psychology. If we believe in our system and are completely unemotional then winning or losing shouldn't influence us. But I think that kind of pat answer rarely illustrates real live people and the way they behave. I think part of being successful is inventing a few of our own personal rules and applying them where needed. But a certain measure of experience and expertise are needed first.
Anybody have gain and loss limits built into their plan?