When starting out, and throughout a career of trading, goals have been of great value. Yet when goal setting people typically make several mistakes which can lead them astray. Here we’ll look at a couple goals new binary traders should set out to achieve, and why these goals (compared to what most people strive for) are so important.
Learning Goals vs. Performance Goals
There needs to be a differentiation between learning and performance goals. Learning goals are about ultimately being able to take action, or more accurately, learning when to take action and not take action. On the other hand, performance goals measure the success of such actions. For new traders especially, focusing on learning goals should be the priority before assessing performance.
Making performance goals–such as “I will make $1000 trading today” can often lead to poorer performance than if the learning goal (action based) such as “Take every valid trade signal I get and manage it according to my guidelines” is strived for.
Being able to stick to a strategy, all the time, is key to fostering good trading habits. Therefore, it is far better to focus on simply implementing a strategy than worrying about performance. If you follow the plan performance actually takes care of its self.
Make one of your goals to stick to you trading plan. At first try to it just for one day (or even one trade, then two and so on)–“My goal today is to trade every valid signal I get, and only those signals.” Then expand it out to try to do it for two days in a row, then three, and so on. Set up little rewards and punishments for following through or not following through on your goal, if you think this will help you.
Consistency
The above goals are designed to build consistency. Consistency is of paramount importance to anyone who wants a long prosperous life in trading.
Consistency comes from having a good trading method, and then being able to implement that method day in and day out.
Since trading conditions are a bit different every day, this is tough to do.
To implement consistency, set the goals mentioned in the section above. But sometimes your mind won’t seem to let you…you keep making mistakes!
Therefore, another goal is to instill some new beliefs in your mind which will help you stay on track. Create these new beliefs by constantly reminding yourself of them, convincing yourself they are true, and stopping thoughts that run counter to these beliefs.
Here are a couple beliefs you should try to instill:
-If I follow a plan, it is not me who determines how much money I make each day. The strategy and market conditions determine how much I make. Therefore, I can let go and trust the back-tested profitability of my system…because results are actually out of my hands anyway.
-I only judge myself on whether I follow my plan, not how much I make. Some days making $10,000 is actually a “bad” if by following your plan you would have made $30,000. Other days making $1 is a great day when conditions are tough, and you followed your strategy to the letter.
-I do not know what is going happen, and convincing myself otherwise is sabotaging my success. Anything can happen in the market at any given time. That is why I must follow my plan, because over a great many trades it has been proven to work.
-Based on the above principle, I realize I don’t need to know what is going happen next in order to make money. I just need to follow my system.
-Since I don’t know what is going happen, I have to set a maximum loss for each trade, and also only risk a small percentage of my account on each trade.
Tying it Together
Performance becomes a by-product of trading consistently according a plan. Therefore, your goals as a new trader are to simply find a trading plan or strategy and follow it–you can buy a strategy, get one from a book, or create your own. Just make sure there is validity to the strategy and that it has worked over the course of time.
Then try to follow the plan for one trade, then two, then a whole day, then a whole week. Don’t worry about performance, you’re goal is to build consistency in how you act. If the strategy does end up being a loser, you can always change it down the road. If the strategy works, but you can’t seem to follow it, work rigorously on instilling the above mentioned beliefs. Think about then constantly, and slowly they will become personal beliefs, helping you stick to your primary goal of consistently following your plan.