We all decide to enter the world of forex trading with a goal in mind. That goal might be to boost the insufficient returns we receive from a basic savings, deposit account. Or we may view the industry as an opportunity to change careers; firstly by trading part time, with the ambition and vision to eventually and seamlessly move into trading forex as a full time occupation. Whatever goals we have, when we take our first tentative steps on our journey, it’s important that we not only keep them at the forefront of our thinking, but perhaps commit them to the trading plan we need to create and adhere to, in order to enhance our chances of enjoying trading success.
Concentrating on a goal and creating a vision, is an extremely valuable psychological exercise. And as we come to learn (very quickly), psychology has a huge influence on our trading performance and ultimate outcomes. Certain psychological advisors break down goal setting into the following criteria, which we’ll relate to trading: significance, value driven goals, realistic goals, specific measurable goals and action plans.
Goal setting is a way of motivating ourselves; we can stay motivated to improve our performance, if we have clear goals and itemize the appropriate feedback. Having significant goals will help keep us focused, it provides assurance to us that we’re working towards a visualized future. Goals are also motivational, working towards goalsdevelops a sense of purpose and helps to createthe energy required to reach targets. A forex significant goal maybe freedom and self-employment; an achievable, motivating factor.
Value driven goals.
The most effective managers will use goals based around a set of core values, they won’t necessarily set goals without purpose, or with only profit in mind, their goal setting might be more focused on an overall achievement and reaching a high standard. With forex in particular, the goal may be to excel at the process of trading, to master the skills involved, with the belief that potential profits will then follow.
To establishour core values we must first decide what values are the most important to us, then weconcentrate on these core values. We must constantly ensure our actions are in line with our core values.
It’s critical that we set ourselves realistic and achievable goals; set the bar too high and we’ll be left frustrated by the difficult task we’ve set ourselves. Set the bar too low and we’ll develop a false sense of security, we’ll then remain content in our comfort zone and won’t improve quickly enough to achieve our aims. In simple terms you’ll derive a far greater sense of satisfaction from setting a target which is testing, but leaves you with a sense of achievement. The most effective goals are also none conflicting and measurable; you can isolate them and use metrics to evaluate their performance.
Avoiding common mistakes of placing stops
Specific, measurable goals.
It’s essential that goals are attainable, measurable and specific. For example; setting achievable targets in the future and attaching a time scale to them. Perhaps you’ll commit to have understood various aspects of fundamental and technical analysis inside twelve months. Or commit to forward test certain strategies, one each month, to then eventually settle on a trading strategy/method that you’ve proven can actually deliver profit.
In terms of actual forex trading, our action plan would differ from our overall trading plan. It would either be embedded in the trading plan, or run alongside. Typically in the action plan, we’d be setting out various benchmarks and milestones, a typical ‘to-do’ list. This concentrates the mind, helps us organize and helps to park some of the trading stresses we need to confront and control on a daily basis. The whole process of trading; as retail traders risking our own funds, can be an incredibly stressful issue. Therefore, using any of the before mentioned planning methods, will ensure that stress is kept to a minimum, whilst allowing us to concentrate on the critical aspects of our trading.