How To Set Goals In Trading

How to Set Goals in Trading



In the Alcoran, it is said that if you know where you are going, any path will bring you there. At the basis of the success on Forex or any stock market lie precise calculations and professional discipline. Accurate setting and writing down your goals help you focus on trading, optimize your course of actions and avoid psychological overloading thanks to planning possible losses, not suffering them as a force majeure.

Psychologists recommend formulating your goals as precisely and carefully as possible, projecting them on your subconscious and controlling your progress towards them. Systematic investors and traders have managed to secure themselves at the top of the market not just because they own some super system or insider information; the reason is, their goals are based on their long-time experience, their knowledge, technology, psychological stability and skillfull risk and money management. Trading without a clear idea of what, when and how we are planning to reach washes the main part of "plankton" off the market very quickly. The more detailed and realistic your goals are, the lower the risk of losing your deposit.

The problem of setting goals

The main issue about setting goals and tasks in trading is the fact that on the financial market money is both the instrument and the result of work. If you ask an average trader about their goals in trading, they will stare at you in astonishment as the answer seems obvious: millions (billions), yachts, villas (castles), supercars and other accessories of successful people. However, virtually any person can tell you the same; it is hard to imagine that anyone could crave for "little" money, a tiny cabin by the roadside, an old bike and even older clothes. Why do most (those trivial 90% of) traders prefer positive thinking to the realistic manner of setting goals? The situation described above does not happen on Forex or other financial markets only; this is the peculiarity of human thinking, frequently seen everywhere in all sorts of forms. It is okay to dream about high revenue, a house, a dream car, power, popularity, health and happiness in general. However, in reality, people hardly go further than dreaming; in other words, they do not take any steps in the chosen direction, or the steps taken are so tiny that they cannot yield any significant result. It will not be a mistake to say that even very experienced traders give a wrong direction to their actions, evaluating the market situation and events subjectively and one-sidedly. No doubt, indicators, forecasts and analyses play an important part, as well as the trader's abilities and skills to define the most important levels on the chart and to feel the dominating moods. A trading strategy and an algorithm may be efficient only taken together, supplementing each other in the case of complicated market situations. However, if the trader has no idea of where they are going, they will not get any result and progress not only in the geometric but even in the arithmetic progression.

In order to get the desired result, knowledge and up-to-date instruments are not enough; to begin with, you have to define (realize) you goals clearly and accurately and remain firm on your way to them. As an example, we can take a super modern ship, designed and built by the leading specialists, using high technology. Regardless of the design of the ship, if an inexperienced and ignorant capitan stands at the helm in a storm, the sea will devour the ship sooner or later. Same with trading. Even if you are using a strategy of a market guru but have no clear path in front of you from the start, it is 99% probable that you will not remain without losses.

The algorithm of goal setting

The algorithm of goal setting

Most often, the problems in reaching the desired goals begin at the stage of formulating them as they seem too obvious. This idea of the "obvious" acts as a ticking bomb. To formulate your goal, you can use the following algorithm:

  1. The goal should be specific. Just "I want to be healthy" is not precise enough. But as soon as you add: "So, I will quit smoking, take up jogging and swimming", things become much clearer.
  2. The goal should be measurable, as "I will swim 3 kilometers and run 5 kilometers a day and stop eating after 7 p.m.".
  3. You will need resources. In our example, they might be time, money for the gym, training facilities or a warm lake nearby, initial stamina, etc. Regardless of the exact resources you may need, it is important that before you start moving you had an idea about their character, their amount and your time limits.
  4. The goal should be of high quality. In other words, it should require maximum effort; there is no use planning to make 10 pull-ups if you can easily do 20. It will be not development (growth) but an attempt to keep fit. Conversely, doing 20 pull-ups 3-5 times with a small additional load will be a good challenge able to bring you to your desired result.
  5. Your time should be limited. If you do not place time limits, you will spend your whole life reaching your goal. An example here may be like: "I will swim 3 km and run 5 km a day starting September 15th till March 15th, 2020. I will spend 2 hours a day training".
  6. Define your profit and the circumstances that can make you give up your goal. For example, it may seem tempting to give up your goal in order to take a longer nap or play computer games. Or, vice versa, reaching your goal may lead to losing something.

If we apply the aforementioned on trading, the list of tasks may look like this:

  1. The goal is to earn 100, 1000, 10,000 USD. To reach the goal, I will use a trading strategy (3 Screens, Trading Chaos, MA+Stochastic).
  2. My task is to earn 1, 10, 100 USD a day.
  3. To reach goal 1, I will start with the capital of 100, 1000, 10,000 USD, choosing the most liquid currency pairs with a narrow spread.
  4. In the case of losing sessions, I will increase the volume to compensate for the losses, but remain inside the risk limits and abstain from trying to get more than planned from the movement.
  5. My trading will take place every day during the European and American sessions from October 1st, 2019 till April 1st, 2020.
  6. I realize that movements of high volatility are possible on the market; they may help reach my goal earlier than planned. If I reach it, I will move on to the goals of larger scale. In case the trading plan is executed too slowly, I will reconsider and optimize my goals.

In the end, the trader may choose the secondary gain and a life of a coach potato, disappointed by a series of losing trades or for some other false reasons; many players give up. Only a firm intention, strong will and a clear plan provide real support on the trader's way to the dream to become a successful pro. There are real and mock traders on the market. Mock traders are those who offer trust management services, CopyFx subscription, trading signals, promise amazing profit, but, in reality, they lose everything during the very first months. Real traders offer more realistic profit of 10-15% a month and the same maximal slump. Such offers are not too popular among investors, but if we trace their dynamics, we shall see a profit of 213-435% by the end of a year. These numbers are for everyone to think about. Anyway, those who get tired of losing their money, sooner or later realize the necessity of planning in trading.

We wish everyone to place their goals wisely.



Left unedited for writing style, spelling or punctuation.


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