October 17, 2019

How to Set Realistic Trading Goals | Tracking Your Progression as a Trader – Ep 37

Are you satisfied with your progression as a trader? Are you a better trader today then the day you first started? If not, find out how you can set realistic trading goals, formulate a plan that tracks your progress, and execute a trading method for long term sustainability.

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Show Notes

Let’s go back to the time you wanted to be a trader, and let’s see how it turned out.

As a novice trader, you thought that:

  1. You were supposed to get up in the morning, workout, have good coffee, and then explore opportunities to trade.
  2. You were supposed to have a method that works! A technique for all seasons, and a method that would work through thick and thin.
  3. Your process was supposed to give you consistent returns, and your losses should have been minimal.

Here are the things you did not consider and neglected:

  1. Trading does not provide the freedom that you thought it did. You need to be more committed and disciplined than someone with a steady job.
  2. You did not consider the mental strength you need to deal with loss!
  3. Above all, you underestimated the importance of setting realistic goals, the work ethic involved, and the continual review process.

Here is what happened in reality:

  • You started trading, and the trading strategy that worked so well on paper did not work out.
  • The small loss that you wanted to take turned out to be a HUGE loss.
  • You deviated from your trading plan and started trading in ways you never thought you would trade.
  • You tried to make it back with some trades swearing it’s just “this time” to make it back, and that trade just about almost killed your trading career.

Well, it’s time to reestablish your trading goals, trading plan, and trading method.

Now here is a little secret: Pain gives you humility. Failing gives you the experience of how to deal with risk, and that is what a trader needs more than anything to gain experience.

You are NOT a failure if you experienced trading pain. All beginner traders will suffer pain. What you do with that experience from the pain will determine your path as a trader.

So let’s talk about trade planning first:

5 Step Design Process Towards Achieving Realistic Trading Goals:

  1. Define your goal
  2. Encounter problems and define them as well (missing trades, cutting your losses, being afraid to enter, too many indicators, etc).
  3. What is the root cause of the problem that stands in your way?
  4. Design a way around these problems
  5. Just do it

What method do you use to judge yourself? Excel? Trading Journal? Where do you put the numbers? If you rely on intuition, that does nothing.

Ask yourself:

  • When are you going to trade? Did you set your schedule?
  • Which markets will you trade?
  • Did you develop a FULL pledged trading Risk management plan? How many losses can you sustain in a raw?
  • How adaptable and flexible is your system? And how will you change it as the market evolves?

Beginner Traders Dislike Failure. Professionals know the Value of Failure and Mistakes.

Mistakes are your building blocks to a successful trading methodology.

If you cannot turn your mistakes into compelling experiences, you will most likely take your winning trades and become way too emotional over them, failing to understand that they are just part of your trading process. There is nothing to be sad about and nothing to be happy about. The only thing to do is follow the process.

We are not taught the value of failure. You are attached to being right and that stops you from learning and evolving as a human and as a trader, not to mention your ego that makes you stick to losing trades.

Here is something I want you to think about: Think of Your Final Goal, Intermediary Goal and Initial Goal.

  • Your Final Goal is to be a profitable trader.
  • Your Intermediary goal is to develop a process.
  • Your Initial Goal is to survive.

You cannot go from the first goal to the last goal.

You can start in the middle.

Every single goal setting process can help you get to the next goal. When you follow this process, you will potentially develop the strengths to become a better and better trader.

  1. The Initial goal “to survive” will teach you one of the most fundamental skills, which is RISK management. The ability to cut your losses short is the BASIC fundamental of trading. It’s  having the humility to say “I am wrong.” It’s the opposite of letting your ego trade your account.
  2. Secondary goals give you the discipline to follow your method and process. This is where you simply stop relying on your “gut” and follow the method at end. No more “it seems like” and no more “it feels like”. The intermediary goals, in my opinion, lays the foundation of all your goal settings.
  3. The final goal of being a profitable trader is predicated on the first two variables. If you can obey the foundational rules and the intermediary process, you can achieve your final goals.

Finally, if you follow the process above you will separate between your conscious and subconscious mind. The subconscious mind of a trader is always in action and that affects your thinking. When you are in a trade and you start “imagining” prices, that is your subconsciousness working and you cannot stop it. Your conscious mind will tell you to stick to your plan, and to just look at the price action.

Good luck with Your Trades.

There is a substantial risk of loss in futures trading. Past performance is not indicative of future results.

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