Setting practical trading goals enables a trader to navigate the financial markets and to realize the profits quickly. Setting the goals helps you follow a consistent trading plan to allow you to evaluate your trading process easily. As a trader, you should have both short-term and long term goals. But how can you set practical trading goals? Read on to understand what you should consider when setting your trading goals:
#1 What Do You Want From Your Trading?
The first question you should ask yourself when formulating a trading plan. Here, you should consider both your short and long term goals. Do you want to become a full-time trader? Also, you should know the amounts of profits you want to make within a given time frame. Have in mind both your personal and business goals and write them down.
#2 Risk Control
Most of the traders lose nearly all their capital when they start trading. To reduce and minimize the risks, set up a robust method of managing the risks by setting aside a fraction of your trading balance. The technique is essential for every trader who wants long term success. Additionally, you can quickly get back to trading even you lose.
#3 Set Your Goals According to What You Can Control
You are solely responsible for all your trading endeavors. If you want to succeed and make profits trading, you must stick to your trading plan. You can choose when and how to trade; however, you cannot control the market movements.
Set goals based on what you can comfortably control, such as:
- Keeping your account exposure below 16% all the time.
- Risking not more than 2% per trade
- Reduce the chart time to 30 minutes every day
- Avoid staking stock trades within two weeks after earning
As mentioned earlier, there are things you cannot control when trading. Therefore, avoid setting goals such as:
- Limiting yourself to what you can make within a week or month. E.g., make $100 daily in the financial markets or $50, 000 monthly on stock trading.
#4 Break Your Trading Goals into Smaller Workable Plans
To achieve your trading goals, break down your goals into smaller workable plans. Breaking the goals into realistic chunks helps you to realize your goals quickly.
Here is a simple way of doing it. Break down your goals into small mini-goals that are achievable within a month. Once you have accomplished the mini-goals, create some more mini-goals for the next month.
Creating small workable goals helps you to build your trading confidence to help you achieve all your trading goals.
As a trader, you must focus on your long-term goals. But, to get there, you should formulate a workable and realistic plan. Most traders focus so much on the long-term goals and forget to plan how to get there. These goals may include what trading platform is best suited for my trading? How often should I check my trading results? And more.
#5 Build Your Confidence in Trading
Most traders get distracted along the way, lose focus, and fail to achieve their goals. There are shortcuts to your goals; you should have a solid plan to get you there. After setting your goals, you need to focus on the steps that will get you there.
These steps help you to learn how to trade and build your confidence to help you achieve your goals quickly. Becoming an expert trader does not happen overnight; it is made step by step.
#6 Reviewing Your Trades
As mentioned earlier, you have to focus on how you will achieve your long term goals. Failure to plan effectively will leave you financially and emotionally crippled.
If you do not have a solid trading plan, do not get into trading in the first place. After every trade, take your time to analyze the financial market. Learning in trading is a continuous process that never ends.
After every trade, look back at what influenced your trading decision, how the trading turned out, and what you could have done better. Analyzing your trading patterns helps you to achieve both short and long term goals and increase your trading profits.
#7 Set Your Goals Based on the Process Rather than the Outcome
A trading plan is essential for every trader. Create a trading process such as: learning all the trading possibilities, noting down your trading profits, and writing down your trading expectations and results. Remember, the trading process is as important as the goals.
Setting trading goals give you a direction and a way of understanding the trading strategies. Set your goals and the process that will help you achieve your trading goals, both short term, and long term goals. Success in trading does not happen overnight. You have to be consistent, follow your plan strictly, and learn every day and have the patience.