In trading, just as in any quest that involves personal growth and education, you might want to set goals in order to evaluate your progress. These goals often help us do better in many professional fields — and trading is not an exception. Yet, in order to start moving in the right direction, you have to target your ambitions in a proper way. Here is a hint on how to learn to do that.
Good goals vs. bad goals
If someone is trying to improve his trading skills, what kind of goals would be best for him? Should he search for how much money he could make in a day or a week? How many deals to close? How many trades to open? It turns out that these are not the best metrics to evaluate your progress. Focus on the process and not in the outcome.
Set your goals as directives, so you will develop the necessary discipline to every trader, and at the same time you take steps towards becoming more professional. Formulate your goals like this then: “Open a trade only when the market conditions are optimal to my trading strategy.
No trading strategy to follow? So your first goal should be to develop one. You might otherwise be the victim of irrational trading and emotional decisions rather than rational ones. Read some professional material (books, articles, and financial blogs). That could count as another good goal for a beginner trader: getting educational trading material.
Limits of control
The stock market can sometimes be unpredictable, but in trading, there are certain things that you can control: the amount of money you invest in each particular deal, entry and exit points, assets you chose to work with. Do not set your goals from a market perspective, set your goals based on the factors that you, as a trader, can control.
Examples of bad goals:
· Make $100 a day / $1 000 a week,
· Earn at least 50% profitability in one deal.
Examples of good goals:
· Use no more than 2% of your entire capital per trade,
· Read at least 1 book about trading in your first month of trading.
One more thing to keep in mind is that most traders want defensive goals that prioritize the existing capital, as opposed to offensive goals that focus on acquiring more money. This means that you should forget about the money and focus on building your skills instead, do things that can help you improve the trading knowledge.
Trading is as much about human psychology as it is about skill and knowledge. Try to learn where you are heading, set your priorities. Goals are an important part of your life as a trader.