Establish Profitable Investing Objectives
What may be found on this page?
- MAIN DISCUSSION POINTS RELATING TO TRADING GOALS:
- Why set goals for your trading?
- WHAT SHOULDN’T BE YOUR GOALS IN TERMS OF TRADING
- THE EFFICACY OF GOALS THAT ARE ORIENTED AROUND PROCESSES
- KEEPING TRACK OF YOUR GOALS AND EVALUATING HOW FAR YOU’VE COME
- AN OVERVIEW OF YOUR TRADING GOALS
MAIN DISCUSSION POINTS RELATING TO TRADING GOALS:
- Why do you need to define trading goals?
- What you shouldn’t have as your primary focus in trading.
- The efficiency of having objectives that are process-oriented.
- Keeping track of your goals and evaluating how well you’re doing.
- An overview of trading objectives.
The process of setting trading objectives may be a helpful activity to assist you in navigating the markets; however, some goals are more valuable to create than others. In this article, we will discuss the types of forex trading objectives that should and should not be pursued, why pursuing the proper goals makes sense in the context of your trading strategy, and how to measure the progress toward achieving your goals.
Watch the video above to hear our analyst Paul Robinson discuss the most effective method for goal planning, and then read the transcript below. He covers why generating money may not be the most important thing, the danger of setting meaningless objectives in a cyclical market, and the ways in which goals can be used to sharpen discipline and consistency.
Why set goals for your trading?
Setting trading objectives is vital for at least two primary reasons: the first will help you stick to your trading strategy, and the second will enable you to trade more regularly. This will include defining a goal that is centered on the process rather than one that is focused on the results for individuals who are new to trading. For instance, setting trading objectives based on strictly adhering to effective risk management and technical analysis and establishing a daily routine that includes exercising and eating in moderation can inspire more consistent trading.
WHAT SHOULDN’T BE YOUR GOALS IN TERMS OF TRADING
In contrast, establishing a monetary target as a trading aim could be more productive. This is because markets are constantly in flux and do not provide opportunities in a linear form; certain trading times are excellent and will fit your trading style, while other periods will not. Because traders have little influence over favorable market circumstances, it is more important to preserve the trading money they already have than to create arbitrary financial goals for themselves.
Other common objectives that are often unachievable include those that are not clear enough or that cannot be assessed. Some examples include “be more disciplined,” “be more consistent,” “trade this or that strategy better,” and so on. Other examples include “trade this or that strategy better.” In what specific ways are those goals accomplished or measured? It is preferable to break down overarching objectives like these into more manageable, process-oriented subgoals and focus on smaller steps.
THE EFFICACY OF GOALS THAT ARE ORIENTED AROUND PROCESSES
Process-oriented objectives, on the other hand, are more likely to help you stay on track with your trading strategy than outcome-oriented goals are. By setting objectives that align with your strategy, you can stay focused on the specifics that will lead to profitable transactions.
To do this, one strategy is to follow the procedure by thinking of it as a series of “If, then…” statements, such as “If this [occurrence] occurs, then I will perform this.” For instance, you may say, “I will enter a long position if the EUR/USD currency pair pulls back to a certain price level and posts a key-reversal bar.” It might be any criteria based on your trading style, but the key is to draw attention to carrying out the appropriate actions with the strategy you have devised.
If you stick to your strategy and do everything by the book, the transaction is a success regardless of whether you make money. If you have an advantage, such as good risk management rules (another set of rules/goals), you can be profitable over the long term.
One shouldn’t conceive successful transactions as “good” deals and lost trades as “bad.” One should think of trades as they are. You can take a ‘good’ transaction and still lose money (as many will), and you can do a ‘poor’ trade and gain money. Both outcomes are possible. It is essential to remember that negative reinforcement refers to undesirable conduct that results in a desirable outcome and that positive reinforcement refers to desirable action that results in a desirable end. You need to make sure that you are concentrating on the second part.
KEEPING TRACK OF YOUR GOALS AND EVALUATING HOW FAR YOU’VE COME
Maintaining track of your goals and measuring your progress is essential to guaranteeing that your plan is successful and to ensuring that you remain responsible. Utilizing a trading checklist and keeping a trading record is a potent strategy for ensuring that your trading proceeds align with your business strategy. Not only does this help you maintain your concentration on making profitable trades, but it also draws attention to areas in which you may improve and motivates you to do so. Those aspects of yourself that need improvement might become new objectives that you should concentrate on.
For instance, you may need to help maintain consistency with your stop-loss or goal targets. This is often the result of playing an overly aggressive position. The straightforward solution to this problem is to lower the risk you take on each transaction. This will prevent you from being forced to make rash judgments due to the large fluctuations in your profit and loss.
One possibility is to keep track of how well you adhere to the strategy by keeping a scorecard for each transaction. On this scorecard, you would assign a set amount of points to each aspect of the transaction and then keep the score. This will highlight areas of weakness and clarify what aspects of your game require improvement.
You will position yourself in the greatest possible way to achieve long-term success if you prioritize objectives centered on “doing the right thing.” There are no certainties, but if you are simply “slinging it around” without any structure or appropriate objectives, whatever short-term success you gain won’t be sustainable. This is especially true if you are trying to attain long-term success.
AN OVERVIEW OF YOUR TRADING GOALS
In conclusion, objectives focusing on the process will be more productive than those concentrating on the results. Instead of creating a monetary objective, for example, which would push you into trading too often or recklessly, setting such goals may assist in putting you in the proper mentality to trade to the best of your abilities. Creating such goals can be more beneficial than setting a monetary goal. Regarding your long-term financial success, emphasizing the process rather than the end provides you with the best chance possible.
Always ensure that you have a trading strategy that specifies how you will enter and exit trades, how your money will be handled, the markets that will be traded, and the risk criteria you will use.
And remember to keep things straightforward. For instance, better concentration may be achieved by narrowing one’s attention to just a few profitable trading indicators rather than trying to use all of them. Simplifying your approach to technical analysis may help you become a better trader by reducing the amount of background noise you have to contend with.
Having trading objectives that align with a sound trading strategy can assist you in developing more self-assurance in your trading. You can get more information on how to create confidence in your trading by downloading our free guide, and you should also check out our variety of supplementary resources to aid you on your trading journey, regardless of your current level of expertise.
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