Goal Setting - As Important as your trading plan
Every year at New Year we hear of people making resolutions of all varieties. Have you ever noticed that these resolutions are usually made without any serious thought or planning involved? This is the difference between a resolution and setting goals.
Goal setting is:
- A focused plan based on proven methods to achieve desired results
- A predetermined set of rules and regulations
We often hear about having a trading and or business plan to succeed in trading. Then comes the education needed to be successful. Before long we are at the screens trading for a living. Day in and day out we follow all our rules and can actually see our account size growing. We are enjoying our trading career for all that it has to offer. Then, one day you ask yourself, "Where is this taking me and how long should I expect it to take?"
The trading career is one of the most unstructured endeavors we can partake in. This is why we need rules and plans to allow for the needed structure to survive. Something we all need to succeed is motivation. Motivation can come from setting goals. Without goals we are just aimlessly drifting through life with no actual destination. Much like a sailboat at sea with a broken mast, not sinking, but not able to navigate its way back to a safe port either.
People talk about their resolutions to lose weight, find a new job, strive for happiness or perhaps start their own business. However, they don't have specific plans to accomplish those resolutions, so they rarely achieve them. If you would like to set some obtainable goals this year, I have listed a few guidelines below for goal setting success.
- Choose a goal that you truly want to accomplish: Perhaps setting a goal to treat your trading as a business instead of a hobby. You must be willing to give your new business 100%. Trading takes a huge commitment to be successful. You have to want to succeed!
- Set specific goals: Saying you want to learn how to trade is too general of a goal. Be more specific such as, "I want to have a trading strategy that fits my personality and risk tolerance." Also, "I want to understand every aspect of my trading plan."
- Set goals that correspond with your other goals: If you set one of your trading goals to make enough money to put say $60,000 towards your retirement, then don't have another goal that will have you spending excessive amounts of money. Make sure each goal supports the other.
- Make goals challenging: We learn and grow in life by facing different challenges. Set your goals to challenge yourself. This makes us "reach" for that next rung on the ladder, thereby driving us to succeed.
- List your priorities: Make a list of all of your goals and decide which ones are your top priorities. Think of your priorities in an order of big rocks, medium rocks, small rocks and sand. Then envision a container (your list) you will be storing these priorities in. Place the big rocks in the container first (they take up the most room), then carefully place the medium rocks in on top of the big rocks, followed by the small rocks. This takes care of your bigger priorities by making sure they are in order and all fit nicely with your goals. The left over sand, your very small priorities not having much significance but still needing your attention, can be "poured" in over the bigger stones and the sand will fill in the extra space in your container. In trading, your priorities could be items such as continuing education, diversification of your winnings to create new revenue streams, keeping up with technology, networking with fellow traders, keeping your trading plan/journal updated, balancing your family life with your trading life, etc.
- List each of your goals: As a reminder, you should write down your goals in places that will encourage you to read them on a daily basis. Read them so often that they become subconscious thoughts. Since each goal you have is significant, you must give each energy by "itemizing" them on an index card. Place this card by your bed, on the refrigerator or anyplace you will always see it.
- Make long-term and short-term goals: If you set goals that are longer than 6 months, make sure you also set some shorter-term goals, also. This will allow you to actually see your progress as you enjoy your journey towards achieving your longer-term goals. Think of the shorter-time goals as rewards. We all need to be rewarded for our discipline to follow our own rules. This will motivate us to stay the course for our longer-term goals.
- Establish realistic goals: Don't make goals that you know are too difficult. This only goes to discourage you right from the beginning of reaching your goals. In the back of your mind you will always be doubting yourself if your goal is too unrealistic. Set smaller goals and as you achieve them and each succeeding goal, you will be compounding your results with more realistic expectations.
- Set your goals to make a positive statement: Instead of saying "I won't throw things after a bad trade," try to write your goal as, "After a loss I will remember that trading is a probability business and one trade does not make a trader. I have good risk management and this will allow me to come back and trade tomorrow for my chance to make a profit."
- Visualize your goals: You should be able to see yourself accomplishing your goals and being successful. In the book, "The Secret," the statement goes that "If you can dream it, you can have it." In the trading arena there is little that is not obtainable by us if we "really" want it. Visualizing your success is one of the ways you have for positive re-enforcement to achieve your goals.
So next New Year, perhaps you may want to start thinking of some goals for your future in trading. By having dreams and ambitions (goals), we will be more motivated to work hard and diligently each day. Our goals can give us reason to want to succeed in our endeavor of trading. By having a trading plan and goals, we have a much better chance of "loving" what we do as our success grows.
"Success is not the key to happiness. Happiness is the key to success. If you love what you are doing, you will be successful." Albert Schweitzer