Does setting a Target for profit booking is amatuer thing?

Few traders think setting a fixted target to book profit is good if the trade goes in the right direction. But few traders don’t fix a target. Either they trade without a target Or trail the Stoploss to book profit.
Do you personally think setting a Target for a trade is good?


It depends on how you are trading. Are you trading breakouts? Or range?

If you are trading a break out, then you (more often than not) should let it run.

But if you are trading a tight range, say there is support at S and Resistance at Y, then you should ideally set targets, because by default you are expecting a bounce there.

For example, when NIFTY is in a channel, and you shorted the top, and the bottom of the channel coincides with a heavy support, say 200 DMA, then I would rather get out at that level that keep the trade open. because the support is more likely to hold than not. (There are many many nuances to it, this is just an example)

But in case of a breakout with unchartered territory, you should not. FOr example, USDINR did a falling wedge breakout in 2011 August or September. It went to 69. One of my colleagues in the desk back then was a mechanical trader who used to do trailing stop loss. His long trade exit happened at 66. Can you believe that?

So, known ranges, with Support and resistance, keep targets. Unknown waters, let the market take you wherever it goes.


A top japanese trader once told me this -

Market is God. If you simply ask the stock market that you want XYZ% annual returns, you will get it as long as you are able to quantify what XYZ% is. That’s right - you will just get it or find a way to get it or have a more reasonable XYZ%. But you will blow up your account if you do not define what this XYZ% is. Because then, you will be in the never ending cycle of fear and greed.

The same crystallises down to a single trade. You have to define the target. And if you don’t - you are simply trying to find the top / bottom which is next to impossible.