Goals are an excellent way to become a better trader. Goal-setting and working to improve your trading through goals are an efficient way to develop a trading edge. Having a goal is a key practice of trading psychology.
Traders: Do you have goals?
Are you one of the few traders who have goals? Or, are you like most traders and think that it is too much effort to set goals so you just don’t bother?
If you want to be a better trader, I’d like to help change your thinking. Although I can’t wave a magic wand and alter your attitude, I can explain why having and working on goals will help to set you apart from other traders. Here are five key reasons to have trading goals:
5 Ways Goals Help You Become A Better Trader
Trading goals give you direction. I have always liked Stephen Covey’s notion that having well thought-out goals will keep you from leaning your ladder on the wrong building. I see many traders in my practice working hard, but not always on the right things. Goals are the first important step in giving yourself the right map to follow.
Trading goals focus your attention. Once you are working on things constructive to your trading, goals help you focus. If you are working on a goal to improve you entries, for example, your attention will be focused on making better entries. Goals help you to channel your effort into actions that will improve your trading skills and that help make you a better trader. Isn’t that reason enough to start thinking about your goals?
Well-constructed trading goals tell you how well you are doing. Most traders track how much money they made or lost, but this has limited utility and it is doesn’t say much about your true abilities as a trader. It is only by having a goal as a reference point that you can measure yourself. Not only do goals tell you how well you are doing, they also tell you what you need to work on. It is only by first knowing where we fall short that we can actually take the needed steps to improve.
Working on your trading goals puts you in control of the right things. We can never control how the market will trade, what other traders do, or whether any given trade will win or lose. But we can control our actions and goals help us in this regard. Let’s again use the example of improving our entries. When working on our entries, we naturally put ourselves in a position of controlling our actions with respect to what type of entry we look for, when we pull the trigger, and letting it pass if it doesn’t set up properly. Goals help us control what can be controlled and let go of the things we can’t control.
Trading goals help you develop confidence. More than anything else in this game, working on and making progress toward our goals gives us that elusive confidence every trader desires and needs. If you really think about it, nothing else in trading brings us the confidence we seek as quickly or as effectively.
Goals are a vital part of trading. Start working on your goals and you may be surprised at how quickly results begin to follow.
An important part of setting up your trading goals is reviewing your trading day. The daily review gives important information on what we do well, where we fall short, and where goal setting can be particularly helpful.
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