I had some fairly awful jobs when I was working my way through college.

My longest running job during college was delivering 160 pound soft-water tanks into people’s basements while their dogs snarled at me. 

The oversized metal tanks I lugged into the houses made the dogs absolutely crazy.  I remember a big German Shepherd viciously biting the tank I was holding at the same time the lady of the house was telling me not to be afraid of the dog.

However, as bad as I may have thought my soft-water tank delivery job was, it does not compare to the job of the Chinese soldier, pictured at the left. 

Can you imagine a less appealing job – holding up a target while other soldiers shoot at it? 

At least it does not take much effort and it is one of the few jobs in the Chinese Army that allows, even encourages, you to sit all day.

Using targets in trading can be like that – easy to do, but leading you nowhere good.

By definition, targets limit your performance if you rely on them as your sole method to exit trades.

Traders often gravitate to using targets for exits because they see the market go in their direction, only to retrace and take back whatever it gave them.   A target seems to allow you to cash in a profit before the market takes it away from you.

In other words, by using targets, you can sit all day and not have to make a decision about which trades to let run and which trades to exit early.

However, just like the Chinese soldier you are likely to miss out on the fun and you could even end up getting hurt.

The market will give you a few ticks time and time again.  I call this the “easy money”.  Traders sometimes think getting the “easy money” is the path to success.  They just try to get the “easy money” again and again.

Getting a few ticks over and over may be easy to do, but it is not the path to meaningful success in trading.

Success in trading is found when you become skillful at exploiting the market when it is rewarding you.  Success comes from letting runners run.  But, finding runners is hard and, for newer traders, it is nearly impossible.

So, what should you do?

I teach traders in my Electronic Trader Mentoring Program to use both targets and runners in their exit strategy. 

We take off half a position for a few ticks.  This “easy money target” gives us a chance to cash in on the quick ticks the market repeatedly gives us.

We leave the second half of the trade on as a runner.

Of course, we seldom get the runners to run.  That is the reality of runners, even for experienced traders.  But, the “easy money target” allows us to put some ticks in our pocket to finance our trading while we await the occasional runner. 

When you get a runner to run, it changes everything. 

One meaningful runner a week can make your trading worthwhile.  A handful of runners a week can supercharge your trading.

The target as part of an exit strategy makes sense when used in conjunction with a runner, not as the sole method of capturing profits.

Meaningful profits in trading come from exploiting the market through letting winners win.  Runners are not easy to find, but they lead to success.  Sitting there watching the target may seem easy, but it leads nowhere you want to be.

Wishing you success in your trading,

Jeff

1-312-685-5333

Jeff@professionaltradermentoring.com

Copyright ©2010 by Jeff Quinto, all rights reserved