How
to Set Goals in Trading?
In trading, as in any pursuit that involves personal growth and education, you would want to set goals in order to evaluate your progress. The thing is, goals help us do better in many professional fields — and trading is not an exception. However, in order to start moving in the right direction, you have to set your goals in a proper way. Learn how to do that by reading this article.
Good goals vs. bad goals
What kind of goals
are the best for someone looking to improve his trading skills? How much money should
you be making in a day or a week? How many deals you have to complete during
the same period? Turns out, these are not the best metrics when evaluating your
progress. Focus on the process, not the outcome.
Your goals could be
formulated such as following: “Open a trade only when the market conditions
meet the criteria stated in your trading strategy”. You, therefore, will
develop discipline, necessary to every trader, and at the same time make a step
towards becoming a more professional trader.
If
there is no trading strategy you are currently using, your number one goal
should be to develop one. Otherwise you will fall victim to
irrational trading and your decisions will be dictated by emotions rather than
reason. In this regard, reading professional literature (books, articles and
this blog) can help a lot. By the way, reading a set number of educational
materials is a good enough goal for every novice trader.
Limits of control
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. There
are also things that you cannot control, and it is the market itself. Do not
set your goals from a market perspective, set 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 a fortnight.
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. In other words, in order to improve your trading skills you should
forget about the money and focus on things that can help you improve instead.
Conclusion
Trading is as much
about human psychology as it is about skill and knowledge. Being able to tell
where you are heading is a valuable part of your trading practice. Goals are an
important part of your overall trading strategy. Have you already set trading
goals for an upcoming week or a month?
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