A new year is upon us and that means it's time to reevaluate your goals.
When it comes to success - in any field - study after study has proven that those who set specific goals and write them down consistently reach much higher levels of success than those who don't set specific goals.
It seems like such a small thing to do in order to greatly increase your odds of achievement, but sadly, most people simply fail to do it.
They go through life waiting for "something to come along" and carry them to success.
Of course, these people spend their whole life waiting for someone else or some kind of "perfect timing" to come along...
and it never does.
Writing down specific goals changes everything.
It puts you in a PROACTIVE position instead of a REACTIVE one.
Once you have your goals in hand, you now set the agenda for everything you do.
At any given moment, you can look at your list of goals and determine whether or not what you're doing right this very moment is bringing you closer to achieving your goals.
For traders, goal-setting can be a little tricky.
It can be tricky because there are two types of goals: those you have 100% control over and those you do not.
The best goals are specific objectives that YOU can control.
You take 100% responsibility for whether or not this type of goal is achieved.
Of course, not all goals CAN be 100% controlled by you.
As traders, whether we like it or not, we're at the mercy of the market.
If I say I want to lose 10 pounds, that's something I can control.
There are simple and proven actions that I can specifically take each day to lose 10 pounds.
If I fail to take those actions, I won't achieve my goal.
Simple as that.
If I say I want to gain 100% in the stock market in 2011, that's not something I can ENTIRELY control.
I'm relying on the market to give me a good trend that allows for me to reach my objective of a 100% gain.
So what's a trader to do? Does this mean you shouldn't set profit targets each year? Absolutely not! Every trader needs to enter each year with specific profit targets.
Personally, I start each new year with a profit target of 100%: doubling my portfolio.
If/when I hit that target - regardless of when it actually happens during the year - I mentally "reset" my portfolio with the same target.
That is, if I'm able to achieve a 100% profit by April 1st, I "reset" my target and start over with a new target of doubling my portfolio by April 1st of the next year.
However, while I take my profit target goal very seriously and it drives everything else I do, I recognize that I can't specifically control ALL the factors involved with achieving this goal.
Don't misread me here.
As a trader, I know that I do control MOST of the factors that will determine my profits in the market.
But, I can't control everything.
If the overall market trades sideways for the entire year, never breaking out of a tight range of, say, 10-15%, then I'm going to have a difficult time riding a trend - either up or down - to 100% profits.
Obviously, a tight trading range for an entire year is highly unlikely, but the point is that traders need to recognize that there will be some periods in which the market doesn't give them a realistic opportunity for meeting their profit targets.
These periods - sideways, range-bound trading - usually only last a month or two before a new trend is established, but such periods can be quite frustrating for the trader who lacks discipline and tries to "force" the market to do what he or she wants.
A successful trader needs to recognize which goals are controllable and which are not.
When a trader sets a profit target that isn't 100% controllable, it becomes even more important for the trader to set several specific and controllable goals that WILL help him achieve his profit target.
These goals need to be specific activities that the trader is held accountable for.
The trader either accomplishes the goal or does not, but the trader is 100% responsible for the result.
These goals need to be actions that specifically address the question: what can I do to reach my profit target? For instance, goals might include: - I will spend at least one hour each evening studying historic charts.
- I will keep a trading journal in 2011 and record my exact reasons for buying and selling every single stock I trade.
- I will read at least one chapter every night from a new or classic top-rated trading book.
- I will never make a trade in 2011 without specifically knowing in advance when I will cut my losses if the trade goes against me.
- I will read every single issue of Darvas Trader PRO (or another respected publication such as Investor's Business Daily) from cover to cover and thoroughly study the charts that are included.
Notice how each of the above examples are specific, actionable goals that you are completely responsible for.
If you enter a trade without knowing exactly where your stop-loss will be in advance, you fail that goal; if you don't read at least one chapter a night, you fail that goal; etc.
The point to remember is that, as traders, we all enter each year with specific profit targets.
Having a big overall goal such as making a 100% in 2011 is crucial to your success.
However, there are forces outside of your control that can disrupt your profit-target goal.
For this reason, you must make a list of trading goals that you CAN be held 100% accountable for.
I suggest making a list of at least 10 specific, actionable goals that you will achieve in 2011.
By taking responsibility for those goals that you can control, you'll find that those goals you can't completely control are often achieved as well.