Clear and Specific Goals
Trading can be tedious at times. Day in and day out you have to look for market opportunities, and once you find them, you have to put your money and a little bit of ego on the line, and suffer the consequences, good or bad. If your heart isn't in it, you'll eventually join the disillusioned minions who have left the trading profession. To make it as a trader in the long run, you must love the process of trading. You must think it's so exhilarating that you would do it for minimum wage if that were the only way you could trade. It's not about the prize. It's a calling, a noble mission.
Who would not want to be a winning trader? With complete financial freedom, you could do anything you wanted. It's necessary, however, to turn the abstract goal of becoming a winning trader into a specific, concrete plan. In their book, "The Inner Game of Trading," Robert Koppel and Howard Abell argue that your trading goals should be clear, precise, and well defined. You must also try to complete your goals within a reasonable time. You should state your goals in an empowering way, and your goals should be realistic. And it's also necessary to set a goal that is easy to quantify.
There are a variety of ways to define trading goals, according to Koppel and Abell. First, you can set performance goals in which you focus on how well you are doing in terms of your own personal standards. When trying to achieve a performance goal, you try to increase your physical and psychological skills related to trading. Second, you can set outcome goals. Outcome goals help determine what's important to you. They allow you to develop trading techniques and strategies that match your personality. Third, a motivation goal helps increase your effort, and allows you to focus your attention on honing your trading skills. Motivation goals allow you to maintain a high level of enthusiasm and confidence.
Koppel and Abell list some important goals that novice traders should set. It's important, for example, to learn to control your emotions. Many traders act emotionally rather than rationally. They also have difficulty taking losses. It's necessary to take losses quickly and easily, rather than dwell on them. It's also important to develop a trading system that is consistent with your personality. All traders should also limit their risk. These are just some examples, but with each of them, it's essential to strive to achieve specific goals every day. On some days, you might just try to set a performance goal. You might practice a trading skill you're trying to hone based on a standard you personally define as adequate. On other days, you might try to achieve a specific outcome, and see how well you do. It's vital, however, to set clearly defined goals, and enthusiastically pursue them. Log your advancement, and reward yourself when you make significant progress.
Many traders make the mistake of trading aimlessly every day without trying to achieve specific goals. As Koppel and Abell put it, it's like trying to saw down a tree without making sure that your blade is sharp enough to cut wood. Goals direct and motivate. Without clear and specific goals, you're making a journey without a map.