Trading is often a separate pursuit. It can be difficult to continue to drive and stay motivated. No boss looks at your shoulders, so when things get rough, it's easy to give up and do something more enjoyable.
Successful traders are committed to fostering courage and determination, but it is not easy, especially when dealing with a market that seems to deliberately try to thwart us.
It's helpful to work with other traders who encourage you to do your best, but a tool you can use yourself is the goal setting. Setting a specific financial goal within a given time frame is a good way to challenge yourself and find ways to produce better results.
If you are a passive investor, goal setting is not a very effective tool. The essence of passive investment is to try to benefit from the overall trend of stocks over time. Passive investors experience ups and downs and hope that their excellent stock choices will produce market beating results over time.
If you are an active trader who is constantly looking for short-term opportunities, psychology is completely different. Because the market is poor, you have to challenge bad returns, but you have to challenge yourself and find ways to generate better returns. You must work harder to find good stocks, use different strategies, shift the time frame and constantly look for certain advantages.
Financial goals will motivate you to stay innovative and persistent in difficult times. If you don't have a goal, it's easy to tell yourself "This is just a bad market and I can't make money. I just wasted my time trying."
Sometimes it's a good idea to walk away rather than struggle in a different environment, but if you have a goal you want to achieve, you are unlikely to give up easily.
How much will you invest in active trading to achieve a specific goal?
You may have long-term investments that are not suitable for the target setting framework. You only want to target the funds you want to actively trade, as this is the only way you can reach the benchmark.
This depends a lot on your trading style. If you are trading fast moving micro pallets, you may have a goal every day. For my style, I think the daily goal is too short. I tend to use a period of at least a week, but for transactions that I track over a long period of time, this is usually too short. A month may be a better time for position trading and momentum investment.
Large funds judge their performance against benchmarks such as the S&P 500, but losses below the index are not what most traders want to do.
You may want to set a dollar or percentage target. For example, a very active trader may set a goal of $5,000 or 5% in an account of around $100,000. Although this is very radical, especially when you think its annualized rate is more than 250%, this is not impossible.
You really have to get yourself to this level, and maybe you won't hit it. The only way is to focus on high-beta, fast-moving stocks, which means higher risk and high probability of volatility. You want to push yourself, but don't go too far, so you can start doing things that you are not familiar with. A reasonable target for a week may be 2% or 3%, and on a monthly basis, you can fight for more than 5% of your goals.
I personally prefer to use the dollar target instead of the percentage target. The actual dollar makes more sense to me, and I think it's more motivating to think in these terms rather than a more abstract percentage.
The goal is to promote yourself, but you also want to learn from your efforts. What kind of mistake did you make? Which method works best and how to copy it in the future? How much impact does market conditions have on your results? What opportunities have you missed?
Trading requires a high degree of self-motivation. Even if we can do better, it is easy to get some decent income. Set goals and challenge yourself.
Elijah Oyefeso is a stock trader who earned lot of money in a shot time. ElijahOyefeso used his student loan to invest on trading and became an expert in trading.
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