A very important task for you as a trader is to define your own trading goals. It will help you to stay on the right track during the journey. Having good goals set strengthens your consistency and discipline. The only catch is to choose correctly.
The purpose of today’s article is to explain the importance of setting trading goals and why some are better than others.
The importance of having trading goals
One of the most important reasons for having trading goals established is to support you in following your trading plan. It can be especially useful at the beginning, however, do not forget about trading goals later on. They will make your trading more coherent and this is another main reason why you should have them specified.
Trading goals will change while you gain experience. First, you should focus on the trading process itself so your goal should be, for example, to stick to daily habits like a healthy diet or getting lots of exercises. Those things are not less important than staying in front of your computer. You should take care of your body and mind because you want to think straight when you finally sit behind the desk. With time, you can move goals’ focus more onto trading outcomes.
What to avoid when setting goals
You should avoid setting some kinds of goals. One example is the monetary targets. They are not the best mainly because you should focus on protecting your account balance in the first place. Once you are able to keep the money in the account you can start thinking about gaining profits. Still, it is not advisable to set the monetary goals. The market conditions change often unpredictably and this is something you cannot control.
Moreover, avoid setting the goals that are unspecific. You should be able to measure your progress. Do not include anything like ‘to work more systematically’ or ‘use this strategy in a better way’. It will be difficult to verify whether you have achieved such a goal or not. Be specific, break big goals into a few smaller ones and choose ones that are possible to reach.
The goals should be focused on the process
Your trading goals should be focused on the process rather than on the outcome. You want to become a professional trader and it can only happen when you develop your skills. Design the goals that will help you to stick to the trading plan you have created.
You can, for example, put your goals in ‘if’ statements. If one thing happens, you will react in such a way. Let’s say if a currency pair you are trading drops to a specific level, you will open a buy position.
Follow the rules you set for yourself and do not worry about the outcome. Sometimes you will win, sometimes you will lose. But remember that even if you occasionally lose, it does not mean the trade was made wrong. Stay focused on the process.
Keep track of the process
You should always keep track of your actions. This will not only help you to stay focused on the process but also will show you which areas need improvement. The best idea is to write a trading journal or use a trading checklist.
When you view your past transactions, you can draw conclusions. You will find out what is the best time for you to trade, which indicators are useful and what kind of strategy suits your trading style.
You can also add a scorecard to your trading journal and note whether you were trading along with your plan or against it. It will show you whether your plan needs adjustments or maybe the plan works well and only you should follow it more precisely.
Setting trading goals does not guarantee success, but it definitely takes you closer to it. You need a plan, you need to be focused and you need to evolve.
Create the goals that are process-oriented. Do not put pressure on yourself to earn a specific amount at a certain time. This will only make you take reckless decisions. Think about a far-reaching plan instead of the near future.
Design your own trading plan where all the details about the trades will be named. Include, among others, the conditions when you enter and exit the market, money and risk management.
Take one step at a time. Do not try every indicator or trading strategy you know. It will only add chaos to your operations. Work on a few tools at a time. It will help you to stay focused.
Following this advice will help you boost your confidence in trading. And you want to be calm and sure when you enter the market. This is possible. Just stay focused on the process and invest time in practice.