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.
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?
NOTE: This article is not an investment advice. Any references to historical price movements or levels is informational and based on external analysis and we do not warranty that any such movements or levels are likely to reoccur in the future.
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