“There is no thought in my mind but it quickly tends to convert itself into a power and organizes a huge instrumentality of means.” Ralph Waldo Emerson
Did you make resolutions for this new year? Did you set goals for your trading? For your finances? For self-improvement? For other aspects of your life?
I hope so. Without goals, without a target, we tend to wander through life drift on our good or bad fortunes. The fact that we really do have control over the direction of our life is too often overlooked. We are the authors of our own lives, the script writers of our trading. By setting goals we set a course.
The goal sets up a tension between where we are and where we want to be. The two must come together. Imagine a strong rubber band around your two hands. As you pull them apart, you feel the tension between the two positions. Let your left hand represent your current situation and your right hand represent your goal, the circumstances as you want them to be. Feel the pressure pulling the two hands together. To relieve and resolve this pressure, you can either move your left hand over to your right hand or move your right hand back to your left hand. You can take action to change your current circumstances and achieve your desire, or you can alter your dream to comply with the current situation.
It’s important that goals be achievable. If they are not, we simply set ourselves up for frustration and failure. This causes us to weaken the commitment and cease courageous and diligent action in pursuit of the goal. The goal atrophies. Because the goal was not realistic, we didn’t believe in it, and we didn’t try, and rightly so.
On the other hand, if the goal is not large enough and meaningful enough, it has no genuine power to motivate us. We want to reach beyond ourselves but not beyond the possibilities. Goals must be realistic.
I have known traders who set themselves the unreasonable goal of supporting themselves and their families by day trading a $15,000 futures account. The first thing they lose is the $15,000. The second thing they lose is their self esteem. They have set themselves up for failure through inadequate preparation and capitalization. When setting a goal for trading, always ask yourself if it is realistic and achievable based on solid research and experience.
Clients often ask me about setting monetary goals for trading. First I ask if the monetary goal is realistically achievable in accordance with their knowledge and experience. Then I ask what they would need to be doing in order to achieve that monetary result.
What do you want? What will having that do for you? When you have a clear conception of what you want, and understand the powerful why of it, then you can begin to figure out the how of it. With a clear what, and a strong why, the hows become easier.
How will you get there? How else? And how else? Ask yourself the questions that will get you where you want to go. What do you already have, and what do you need to develop?
If you haven’t already done so, set yourself seven goals for the rest of 07, and start thinking about 8 for 08. Set goals for trading and investing, as well as goals for all areas of your life.To be a successful investor and trader, you need to be balanced in the rest of your life.