One of the most important things that anyone can do to be successful is to goal set. If you talk to anyone who has accomplished anything worth wild they have probably wrote down there goals at one time or another. After all, we all need a target to aim for when trying to accomplish anything in life. So yes, I highly recommend goal setting for everyone, especially new traders and here is more insight into why this is so important…
Goal setting is pretty easy to do. You simply write down what you want to have or do on paper. Then you write out a plan to achieve this goal and read it everyday. This sounds simple enough, but many people do not ever reach their goals or dreams despite goal setting. Why is that? You see, everything takes time and we live in a society where people want instant gratification. Just think about it, most people set goals around the new year holiday. Unfortunately, in about a months time those “new year resolutions” are usually just a lost memory. Think about how many people say they want to lose 20 lbs at the start of the year, a lot. These same people usually have the same goal every year and very few of them actually lose weight. Well, traders do the same thing when it comes to goal setting. They write down what they want to accomplish, only to forget about it in a few weeks. I was guilty of this myself in the early part of my career.
The best way to goal set for a trader is to really evaluate him or herself first. I can’t begin to tell you how many times someone had a $5,000 futures account and wrote down that they wanted to earn $1 million in the next six months. That is not realistic, you probably have better odds of hitting the lottery than making a million dollars in six months on a $5,000 account. A novice trader should aim for 3 to five successful trades in a week, that is a good goal for any novice trader to have. Believe me, that goal will not be accomplished by most novice traders in the beginning of there trading career. This business is tough and it requires a lot of study and hard work. I laugh sometimes when I hear people tell me they need to get into the trading business so that they can make millions of dollars. If it were that easy wouldn’t everyone do it!
The bottom line, novice traders should set goals that are attainable so they don’t get discouraged. Even setting a goal for a positive P&L by the end of the week or month is good. Trading is a business, not a casino, treat it as such and you will not become a statistic.
One of the biggest pitfalls that new traders make when they goal set is trying to make a specific amount of money every day or week. This is a big mistake and I’m guilty of this myself in the early part of my career. I remember writing that I wanted to make $500.00 a day and usually lost $300 a day. Then the days that I was actually up by a couple hundred bucks I would force a trade to get to that $500 level and I would lose the money I just made earlier in the day. I fixed this by writing a goal that I wanted to be positive by the end of the week and I did not focus on the amount of money that I needed to make. Even today, my goal is to just have positive trades by the end of the week, month and year. Believe me, when you get good at this business the winners take care of themselves.
Another goal that I set for myself that has changed my trading career has been using a stop loss. I wrote as a goal that I will always stop out of a stock if it closed below my stop loss level on a chart. Once I was able to do this my whole trading life changed. Before this goal was set, I would have a stop loss in my head but I would never abide by it. What a fool I was, but that was when I was a beginner and that is what most novice traders do. Anyone that does not abide by a stop loss is just a beginner, a rookie, not a true professional. Set that goal!
Bottom line, goal setting is a must for life in general. But when it comes to becoming a successful trader, you need to set goals with a purpose and they will help you live your dreams!
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