Setting Goals for Trading

By David Hobart
19 January 2009

Goal setting is an important part of my trading process. Focusing on percentage returns and not the money is the first thing. Then focusing on process improvement is the next. But before we go there, I would like to share some thoughts on why I think goal setting can be helpful to your trading and your life.

Why Goal Setting?

The mind is a powerful tool. It never sleeps. It requires a focus in order to express its power. You either consciously control that focus and be free, or you allow your unconscious mind to control you by latching onto old thoughts; thoughts that recur continuously and keep you trapped in your past.

By focusing your mind on what you want, you are far more likely to get it than by allowing your mind to wander. A wandering mind still has power; but you are not in control of it. In my view, all thoughts have power. When focused and positive, thoughts tend to be creative; when loose and meandering, they are often destructive. Goal setting is a means of channeling your thoughts toward outcomes that you want; they help the mind to be a powerful creative force.

How to set goals for trading

Firstly, I set my goals each year, and for each 90 days. I not only consider what I would like to generate in terms of returns, I look at my trading business holistically and ask myself how I would like it to look and feel at the end of the year or end of the quarter.

It is important to set goals that inspire you, but that are also achievable. Goals are not dreams; they need to have some grounding in reality. If you set goals that are out of whack with a reasonable reality, they can become disempowering, because on some level you just don’t believe you can achieve them.

The paradox of focusing on the money

I find it is always better to set return objectives in percentages, not in dollars. I have been through the stage of thinking about individual trade profits in terms of bathroom renovations, and it just didn’t work for me. I started to get too focused on the money, and lost focus on my process and the validity of each trade idea. Whilst success in trading is measured in money, I find that being too money focused causes me to become ego oriented. I start thinking about how good I will look spending it, which takes my mind off thinking about how to make it in the first place. This roundabout is usually not conducive to consistent profitability, so it’s best avoided.

Process Improvement

I will then set goals around my process. How I would like to improve it over the quarter/year. I break my strategy down into its components, and look at each area to see how I can improve it. For me, I am always looking for ways to increase leverage and productivity. I’m looking to do more, with less effort.

For example; I look at ways to improve my time management so that the forecasting part of my process is allowed the time it needs to be a creative endeavour. I look to improve my entry execution by looking at different ways to systematize technical and behavioral patterns.

By setting goals around my process improvement, I also spend less time focusing on the money, which as we know is not a bad idea.

If you would like to find out more about David Hobart’s trading coaching and mentoring programs, please email David at dhobart@traderemotions.com.au  . 

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