How do you predefine a profit?

I was wondering when you go into a trade how do you set or what do you use to set a take profit? Do you just say I am going to take a 10 pip profit? or a Hundred? Or should you let yourself be stopped out of the market? Or do you say I will make a x amount of the percentage I am risking? Or do you get what you can take from the markets? What do you use to say " this is where I exit this trade at a profit".

....utilize DiNapoli's logical profit objectives.


Lou

In my case, I found this to be the most important impediment to taking as much from the markets as possible.I can pick winning trades with amazing accuracy but I make less money than a friend of mine who is pretty rubbish at picking good entry points. LoL. I get in at the beginning of pretty much all significant moves, but like taking profits so get out sometimes before he gets in . He has the analytical ability of a plank of wood but once he gets in, you can't move the man come hell or high water. What he does is use mindless things like MA x-overs and the like and trail his stop until stopped out. And I hate him for being so dumb but rich.

I am improving bit by bit and I will tell you how, Bluemonkey. What I did was, accomodate my desire for hearing the till ring and the need to let profits run. This is important because you want to channel your mental issues in appropriate ways or the conflict will kill your trading. So, On my longer term positions (2-3 days max), I use trailing stops of 50 pips or significant s/r levels, whichever is the higher. This means giving back some profits but that is the price you pay for holding out for more. I also violate this rule from time to time. No mechanical trading for me.

Since I have a burning desire to take quick profits, I also devised an amazing scalping method going for 10 pips at a time on Cable. (Don't try this at home folks ).

Don't use set profit targest unless there is a reason for it. So, if using some mehod, you think the price will go to level x, then it makes sense. But to go blindly for y amount is a bit stupid. Imagine you always target 150 pips and the price hits 120 pips profit and a double top at the same time. You will be pretty dumb not taking the profit at that point and end up with nothing! So, use set targets only if you can determine a good reason for it.

I post this just because it makes me feel good, not to help others. Cheers.

there are of course a million ways to do it...i usually start by setting the stop, and making the profit target some multiple of the stoploss. i like getting at least 3x my stoploss on the big winners. my profit target is not the only way i get out of the trade though. i usually have four ways to exit...

1. stoploss
2. profit target
3. reversal signal
4. time limit

I knew about the stoploss and profit target. I did not think about the reveral siganal nor the time limit. You got me thinking. Good luck to you Merlin, in the contest. I am very competive by nature and can't wait till I am good enough to enter one of these. Go Merlin!

I like to set my profit targets improbably but not impossibly high, often five to eight times my stop. I then use a secondary exit such as time or an indicator. This allows me to get nice steady returns while still getting a good piece of the big moves.

yeah you especially need that time limit, it keeps your cash free. that becomes important as the complexity of your portfolio grows.

thanks for the cheers man, i will see what i can do! im doing pretty good so far, but its still early in the contest.

Good question. Obbiously it must be part of your trading strategy. Trailing stops imply one does not know how far the market will go, and is set up for automatic adjustment. If your analysis got you into a trade using certain data, then after time has elapsed and additional data has been gathered, one could assume the additional data would provide a revised opinion. If a trader can rely on his opinion to enter a trade, why shouldn't he be able to rely on his opinion after that additional data has been analyzed? I think a successful trader needs to have the proper psychological makeup and be able to adjust with the market.

Patrick

Yes I pre plan what profit I should try to gainin particular trade. After analysis and seein market movement I decide about pips. Normally I accept 6 to 10 pips profit . If market is in favor it may be reach to 20 pips ,but I do not go so far with trend where my earn profit is lost suddenly.