Number One
Number One
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US $149.99
The number one goal-setting mistake traders make is setting goals related to money. Active traders will often tell me that they have a goal of making X-dollars a day or X-points a day. That's just not a good way to structure a goal.
Trading Goals Related to Money
What happens when the market trades in a very narrow range? Typically, price movement will remain within the first hour's range throughout the day. That range might only be 5 or 6 points -- too narrow to offer much trading opportunity. It is very difficult to make money on such narrow range days.
So, if you goal was to make X dollars a day how do you do that on a narrow range day? Since it is nearly impossible to make good trades on such a day, you would have failed to achieve your goal. And, if you couldn't read that the market has narrowed its range and instead tried to reach your money goal, you would have likely been trying to trade at every little turn and wound up over trading a choppy, range-bound day. At best your money goal had set you up for failure because you couldn't achieve it. Worse, your money goal caused you to force trades in a choppy market, and maybe you lost money. Goals that promote failure, poor trading habits, and losses are not useful goals.
A Better Trading Goal
A better goal focuses on your development as a trader. It will help you improve your trading knowledge, skills, or abilities. Rather than thinking about money, think instead about the process of trading. The process of trading simply refers to the skillful actions a trader takes in trading effectively. A useful question to ask is:
What trading process, if I were to improve and develop in this area, would add to my ability as a trader?
Example of a Better Trading Goal
An example will help to illustrate how to do this. Let's say you want to improve your ability in trading trends. You have done a self-assessment of your trading on trending days and find that your greatest limitation is that you tend to counter trade the trend. A simple solution might be to notice whether the market is moving with momentum and making higher lows and higher highs (for a bullish trend). A useful process goal then becomes:
Prior to taking a trade that fades a move, I will assess whether the market is moving with momentum and making higher highs and higher lows. If it is trending, I will not take the trade. I will execute this process on at least 85% of all trades considered over the next 20 trading days.
Note that this goal is useful because it builds skills and ability in assessing market movement. It also keeps the trader from taking poor quality trades. The next step for this trader would be to develop a goal to execute trades consistent with the trend - again, a process goal.
Trading goals should be designed to help you achieve. Goals related to money, points, or other 'stats' won't help you do that. Work on trading goals that are related to achievement by helping you to develop your trading skills.
And now, I'd like to invite you to claim your FREE, seven-part e-course on developing your trading psychology skills from http://www.tradingpsychologyedge.com
You will receive weekly emails detailing pratical trading psychology tips you can immediately use to improve your trading. At the end of the series, you will also recieve a bonus - so there are eight great tips in all!
Dr. Gary Dayton - TradingPsychologyEdge.com
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