Once Lawrence J. Peters said, “If you don’t know where you are going, you will probably end up somewhere else.” That is the importance of goals in the simplest words. People with vague vision never reach their destinations. They don’t get up every morning with a burning desire in their hearts to do something. They lack goals and have nothing to look forward to.
- Traders often fail to achieve their goals.
- The main reason of their failure is setting unrealistic goals that aren’t achievable.
- Goals should not be a reflection of your own aspirations, preferences, and needs.
- You have to give a realistic touch to your trading rules to make them achievable.
Goals are important in life. They are not only the expectations and desires, they are a bridge between reality and idealism. Once you set a goal, you accept reality and start working on doing better and cover your shortcomings.
Goals keep you moving until you realize that even those things make the difference that seems trivial. If you are a footballer, you add 15 minutes to your training session. You run and practice more. If you are a teacher, you take some extra minutes to prepare your lecture. And if you are a trader, you observe and analyze your trading plan and trading systems. You move your stop-losses a pip or more above breakeven. That is how setting goals keep you going and trading goals are not different.
Setting goals in life doesn’t allow you to be complacent. They continuously urge you to push harder. That is how you become more aware of yourself, your potential, strengths, and weaknesses. Each step you take to achieve your goals allows you to have a better glimpse of your true potential and that zeal becomes your energy. However, your goals should be realistic in life as well as in trading. Setting realistic trading goals isn’t easy as it seems and most of the traders fail to realize their goals.
Why do traders fail to achieve their trading goals?
Traders often fail to achieve their goals. The main reason of their failure is setting unrealistic goals that aren’t achievable. The following shortcomings lead traders to failures.
- Some traders become too obsessed and preoccupied with their desired success. For example, such as moving a lot of pips in order to make huge profits or cover their losses. They completely overlook the realistic aspects and embrace idealism.
- Another reason for a trader’s failure might be a lack of solid follow-through. They don’t follow their goals with conviction. It isn’t enough to set goals and sit back thinking happily and expecting things to go in your favor. You have to put in the required efforts and take the necessary steps.
- Some traders don’t remain committed and disciplined enough to achieve their trading goals. They overlook the fact that trading isn’t like a steady job. It requires utmost commitment and discipline. Whoever fails to do that, fails to reach the destination.
Must-follow rules to set realistic trading goals
Goals should not be a reflection of your own aspirations, preferences, and needs. You have to give a realistic touch to your trading rules to make them achievable. There are some rules that trading gurus follow to set their trading goals. So, if you want to join the elite class of successful traders, you should map your trading goals with the help of the following rules.
- Have a strong and definite trading plan that suits your individual needs, personality trait, and financial situation. Setting trading goals without a proper trading plan is unrealistic and useless as per the saying, “A goal without a plan is just a desire.”
- Have a mix of long-term and short-term goals. Having short-term subsequent and progressive goals keep you on track. Achieving smaller and short-term goals keeps your morale high and ensures you that you are heading right towards your long-term goals.
- Being flexible and moderate is important in the matter of risk management. You should neither be a risk-averse nor a risky player. Finding a sweet between the two extremes can be the key to achieve your goals.
- Don’t invest money that you cannot afford to lose. Trading is highly rewarding but it is also very risky. Traders lose entire capital. Therefore, invest money that you can afford to lose. Keep your financial standing in mind before setting trading goals.
How to set the most effective trading goals?
It is aptly said that money is just a byproduct if you are making the best possible trades. That should be your inspiration when you set your trading goals. Don’t set your trading goals that revolve around money, return, and pips. Don’t incline your goals towards things you cannot control. Your goals should be oriented towards what you can control. That is why you should focus on becoming one of the best traders. Aim for some short-term goals as well like weekly improving your trading skills, steady progress, etc. That also means that adopting a long-term mentality is also the key. You can set the most effective trading goals by following the tips given below.
1. Set the odds in your favor
Traders whose first and the foremost goal is self-development turn odds of success in their favor. They realize that the self is probably the weakest link in the trading business. Therefore, it always proves fruitful to continuously work on and develop yourself. Set a long-term goal of self-development and also set short-term goals as well. You can listen to lectures, trading podcasts, or trading books and welcome new ideas. You can also analyze your trading journal and learn what went well and what bad for you. Moreover, you must also learn how to control or keep your emotions at bay. However, your focus should not be only on mental training. Your health is also important. Daily exercise helps you relax and get rid of the negative effects caused by a desk-bound routine in trading.
2. Seek to improve your trading routine
Traders who set goals like improving trading routine and get more professional also become better traders. A professional approach helps you become a successful trader. For example, if you regularly keep your trading journal updated, you begin to learn a lot. When you begin to review your journal at the end of the day, you begin to understand your trading outcomes. You begin to know why successful trades were successful and why failed trades failed. Similarly, you can also adopt other routine activities that help you achieve success. Thus, setting a goal to adopt a better and professional routine is among the most effective trading goals.
3. Manage your risks
Traders who set trading goals focusing on a risk-management plan can easily minimize losses and maximize profits. Trade with a small amount of money until you master your trading strategy. You need to have a sweet spot between risk-averse and risk-taking. It will help you to make a profit, minimize losses, and keep on trading for a longer period of time.
4. Be picky
Traders should also set trading goals to trade only the best trade setups and don’t overcommit. It helps you to decrease risk as well as eliminate possibilities of incurring losses.
5. Don’t wait for perfection
Nobody is perfect and probably no one can achieve perfectness. However, you can set trading goals for yourself to make the least possible amount of mistakes. For example, you can closely follow your trading strategy, enter a few trades, don’t break your trading rules, etc. to make the fewest possible mistakes.