Whenever anyone comes to me for help in starting a trading career, one of the first things I recommend is organizing a business plan. It provides direction and helps novice traders start off with a systematic approach.
I suggest that new traders put their costs, their goals, and how they intend to achieve those goals, in writing. It's the same approach you'd follow for any other business. They usually come back with a reasonable plan.
Say, for instance, you have $10,000 a month in expenses. To earn that amount you would need to net around 50 cents a day, trading 1,000 shares. So you would start off learning an appropriate trading strategy and build up to that goal. It sounds simple enough, but the problem people quickly run into is that this isn't exactly like any other business, is it?
Trading Without Goals
We live in a very goal-oriented society. Aristotle once said, "Man is a goal-seeking animal. His life only has meaning if he is reaching out and striving for his goals." And I believe it's very important to have goals. They help keep us focused and motivated, giving us a sense of purpose and direction.
But trading is a funny occupation. Many of the same things that create success in other endeavors will cause problems in your trading. And so it is with goals. Trading goals can put you in a mindset that may very well act as a negative force on your trading.
One of the problems with setting trading goals is that too often, the goal is all we can think of. Albert Einstein once said, "The American lives even more for his goals, for the future, than the European. Life for him is always becoming, never being." A lot of people look at this occupation in terms of making money and enjoying the freedom that trading affords, and they don't really have a love of trading for trading's sake. If you fail to enjoy the process of striving toward the goal, it will be difficult to reach that goal.
Another problem is that people always seem to set their trading goals too high. Your goal has to be reasonable for your skill level. Otherwise, you are setting yourself up for a lot of frustration. Trading goals automatically add pressure -- and the higher the goal, the more pressure there is. The more pressure there is, the more emotion you add to your trading. The more emotion you have, the more mistakes you will make.
There is an innate problem with setting up daily trading quotas as a goal. You can't force good trading setups. They either come to you or they don't. We are entirely dependent on what the market offers us. That means some days you will meet your goal, and some days you will not. It is hoped that the good days make up for the bad ones, but you have to come to terms with the inconsistency. If you try to force trades, you will invariably suffer an increase in stops.
I suggest that new traders put their costs, their goals, and how they intend to achieve those goals, in writing. It's the same approach you'd follow for any other business. They usually come back with a reasonable plan.
Say, for instance, you have $10,000 a month in expenses. To earn that amount you would need to net around 50 cents a day, trading 1,000 shares. So you would start off learning an appropriate trading strategy and build up to that goal. It sounds simple enough, but the problem people quickly run into is that this isn't exactly like any other business, is it?
Trading Without Goals
We live in a very goal-oriented society. Aristotle once said, "Man is a goal-seeking animal. His life only has meaning if he is reaching out and striving for his goals." And I believe it's very important to have goals. They help keep us focused and motivated, giving us a sense of purpose and direction.
But trading is a funny occupation. Many of the same things that create success in other endeavors will cause problems in your trading. And so it is with goals. Trading goals can put you in a mindset that may very well act as a negative force on your trading.
One of the problems with setting trading goals is that too often, the goal is all we can think of. Albert Einstein once said, "The American lives even more for his goals, for the future, than the European. Life for him is always becoming, never being." A lot of people look at this occupation in terms of making money and enjoying the freedom that trading affords, and they don't really have a love of trading for trading's sake. If you fail to enjoy the process of striving toward the goal, it will be difficult to reach that goal.
Another problem is that people always seem to set their trading goals too high. Your goal has to be reasonable for your skill level. Otherwise, you are setting yourself up for a lot of frustration. Trading goals automatically add pressure -- and the higher the goal, the more pressure there is. The more pressure there is, the more emotion you add to your trading. The more emotion you have, the more mistakes you will make.
There is an innate problem with setting up daily trading quotas as a goal. You can't force good trading setups. They either come to you or they don't. We are entirely dependent on what the market offers us. That means some days you will meet your goal, and some days you will not. It is hoped that the good days make up for the bad ones, but you have to come to terms with the inconsistency. If you try to force trades, you will invariably suffer an increase in stops.
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