Day Trading Tips and Tricks

July 14, 2018

Erich Senft

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Discover the Power of Setting Trading Goals

Trading Goals are Important

Everyone knows goals are important. Most of us have set goals for our personal life.  It should be no different for our Trading Life as well.

Trading Goals for Account Growth

Personal goals may include losing some weight, exercising more, quitting smoking, being active in our community, or spending more quality time with our family.

In our Trading life, we set trading goals to be more organized, earn more money, grow a trading business, complete a trading course, or simplify our trading methodology.

These are certainly all worthy goals. However, most of these trading goals will not be achieved.  Why? Usually, because they were not properly set, to begin with, or the person setting the goal was not committed to making it.

Your attitude is critical – To achieve anything worthwhile in life, you must have a positive mental attitude no matter what other successful attributes you possess.  A positive mental attitude is an energy that when combined with your other skills and attributes, allows you to reach your trading goals. Success is achieved and maintained by people who work hard with a positive mental attitude.

I believe trading becomes fun when we set and achieve specific goals. All successful people have a definite purpose combined with a positive attitude. They regularly ask, “Where am I going? What do I want? What are my trading goals?” When this happens, trading becomes more enjoyable and rewarding instead of an unpleasant means of paying your bills. You become self-motivated and enthusiastic. And that enthusiasm turns into achievement!

The Importance of Self-management

Trading Goals and Self Management

Good self-managers enjoy their trading because they accomplish more, and they give themselves more credit. You can increase your performance by improving your self-management abilities. Setting personal and business goals are tools that will help you improve your self-management.

The Secret To Achieving Trading Goals

  1. Be Positive – State what you want to do. If you want to avoid or stop doing something, state your goal regarding what you want to do instead.
  2. Set a Deadline – A deadline provides you with the needed time frame for achieving your goal. It gives you something to aim for.
  3. Be Specific – You’ll want to measure your progress as you work toward your goal. The more specific your goal, the easier it is to measure your progress. Always quantify your goal.
  4. Be Realistic – Goals should be realistic and yet cause you to “stretch” to reach it. Setting unrealistically high goals will cause you or your people to feel bad for attaining only 90%, or worse, they may not even try to make it. Better to set smaller goals, meet them, and then set a higher goal.
  5. Write Your Goal Down – You must be able to write your trading goals down. Your goal statement must answer as many of the following questions as possible.
    • Who?
    • Will do what?
    • When?
    • Where?
    • To what extent?
    • To what degree?
    • How much? How long? How hard? etc.

Example: My goal is to improve my trading profitability 25% over last year by year end.  I will achieve this by solidifying my trading methodology and aggressively adhering to my trading rules.

The example above emphasizes doing something. It describes what the accomplished goal will look like.

Your Trading Goals Should be S.M.A.R.T.

  • Specific – State exactly what you want to achieve, how you’re going to do it and when you want to make it. A specific goal that is well defined has a much greater chance of being accomplished than a general goal. I suggest you begin with a goal that you can achieve within a week to a month. It’s easy to give up on trading goals that take too long to reach. If you have a big goal, break it down into a series of smaller weekly or daily goals. After you achieve one of the smaller goals, move on to the next. To set a specific goal, you must be able to answer these questions: Who: Who is involved? What: What do I want to accomplish? When: Establish a time frame. Which: Identify requirements and constraints. Why: Specific reasons, purpose or benefits of accomplishing the goal. Example: A general goal would be, “I want to lose some weight.” But a specific goal would be, “I want to lose 20 pounds by joining a health club and working out three days a week and eating healthy meals.”
  • Measurable – To know if the goal is attainable you need to set the criteria for measuring your progress. Measuring your progress makes it easier to stay on track and reach your goal within the time frame you wanted. The excitement that comes from achieving your goal drives you on to set new trading goals. A goal doesn’t do you any good if there’s no way of telling if you’ve achieved it. “I want to feel better” isn’t a very good goal because it’s not specific and it’s difficult to measure. “I want to workout three times a week for 30 minutes,” is a better goal because it’s specific and measurable. To determine if your goal is measurable, ask questions such as – How much? How many? How will I know when it is accomplished?
  • Attainable – Once you identify the goals that are most important, you then must figure out ways to make them come true. You develop the attitudes, abilities, skills, and desire to reach them. You will recognize opportunities to bring yourself closer to achieving your trading goals. Ask yourself whether the goal is within reasonable reach. For instance, completing a marathon is not an achievable goal if you’ve never run before. However, completing a 5K run an attainable goal if you take the steps required to train. History shows people can attain most any goal they set when they plan their steps wisely and establish a time frame that allows them to carry out those actions. Goals that may have seemed far away and out of reach eventually move closer and become attainable, not because your goals shrink, but because you grow and expand to match them. When you list your trading goals, you build your self-image. You see yourself as worthy of these goals and develop the traits and personality that allow you to possess them.
  • Realistic – To be realistic, a goal must represent an objective you are both willing and able to achieve. Goals can be both high and realistic. Is the goal realistic for you? The purpose of a goal is to shift your focus from where you are today to where you want to be in the future. However, you can’t ignore your limitations. Your trading goals need to be within your capabilities. If your business has suffered a serious setback and revenue declined 20% last year, a goal of increasing your revenue by 50% this year may not be realistic. Instead, your goal might be to get back the 20% revenue you lost and then build on that. You are the only one who can decide how high your goal should be set. A high goal is often easier to reach than a low one because a low goal is not as valuable and creates low motivation. Some of the hardest jobs you ever accomplish may seem easy only because you enjoyed what you were doing. Your goal is probably realistic if you truly believe that it can be achieved. Another way to know if your goal is realistic is to determine if you have accomplished anything similar in the past.
  • Timed – Set a specific time frame for achieving the goal; next week, three months, by the end of March. Putting an end point on your goal gives you a clear target to work towards. If you don’t set a time, the commitment is too vague. It tends not to happen because you feel you can start at any time. Without a time limit, there’s no urgency to start taking action now. Remember, the time frame must be measurable, attainable and realistic. Not too long, which can affect project performance.

Trading Goals with NinjaTrader

Achieving Big Trading Goals with Small Steps

Again, let’s use a trading example.   Suppose your goal is to improve trading profitability 25% over last year by year end.

You can’t accomplish that aim or any other without first identifying what actions need to be taken and prioritizing them. In this case, you won’t achieve the goal until:

  1. Consistent revenue from current trading activity is estimated
  2. Trading rules are identified and documented
  3. A plan is created to evaluate daily trade activity
  4. Revenue targets are assessed on a Weekly basis
  5. An on-going education path is documented
  6. Opportunities for technique improvement are identified

Celebrating your victories – Keep in mind the importance of achieving each of the steps is to help you reach your ultimate goal. The key is to know what actions you have to take and prioritize them, so they get DONE!

As the saying goes “Success is the journey, not the destination.” Enjoy the experiences along the way and celebrate each small victory. These little celebrations will help you get through the difficult times you will encounter. Every road to achieving your goals will have its bumps. Celebrating your victories will help you get through them.

Set your trading goals now.  Consistently review them and redefine as needed. Know what actions to take and when to take them.

July 14, 2018

Erich Senft

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