“Define a target, a strategy consistent with the target, a set of disciplines to follow, and risk management guidelines. Then trade, track and evaluate your performance.” – Ari Kiev
This is not a how-to post; this is a how-to-think post.
What troubles me about the majority of Forex trading activities is the sheer lack of strategy and purpose.
I get lots of questions about technical analysis, news, and reports — factors that don’t support real trading goals. Yes, these things may be interesting, but they don’t get the aspiring trader very far because they are going about it the wrong way.
The majority of traders have an upside down business model.
Upside down trading
I believe that the majority of traders are doing it wrong. They put their heart and soul into developing an amazing trading system, but then scratch their heads when they don’t get what they want out of it.
Instead, traders should focus on their goals first, and like the late Ari Kiev suggests in the opening quote to this post, go out and build a strategy to achieve that goal.
Don’t believe me? Consider that Van Tharp suggests that as much as 50% of your planning process should revolve around objective setting, or our very own hedge fund manager 888’s number one piece of advice to aspiring money managers:
“I’d say gain an understanding of the metrics that they need to achieve, ideally before embarking on creating the track record – then devise a risk management/trading strategy that achieves those metrics.”
It all comes down to having clarity about what you want to achieve and then figuring out how to do it next.
In 1937, Napoleon Hill – inspired by a suggestion from business magnate Andrew Carnegie – published his seminal work Think and Grow Rich.
The book’s title is no accident.
Hill came to the realisation through his study of wealthy individuals that their success was a mindset – it evolved from how they thought first, and then what they did as a reflection of what they thought. He believed that if you adopt a winning mentality, then your subconscious mind would start to work to make your beliefs into reality. This same process is echoed in the more recent The Magic by Rhonda Byrne, which is recommended to traders by Van Tharp.
This is not an exercise in manifesting what we want out of thin air, i.e. sitting back and waiting for the checks to arrive in the mail (though if that is a belief that works for you, I am not one to stop you). Rather, once we have a definite intention towards something, our subconscious starts to work towards getting what our conscious mind has decided it wants.
This is of particular importance for traders. Many of you will feel like you need a “system” first and that goal setting will come later, once it is tested and “making money”. That is upside down thinking.
Give your trading a boost and access the full spectrum of your abilities by setting goals first, and then working out how you will achieve them second.
Your goals should push you
When you set goals you should establish what are called “stretch goals”.
Stretch goals are at the end of the spectrum of what you think you can achieve. For example if you think you can make 50% this year, but a tiny voice inside you is saying you can actually make 100%, then go with 100% as the goal.
This will give you a greater chance of reaching the goal, and it will also establish a benchmark for your performance.
You may not necessarily achieve the goal (it is not meant to be easy after all!) but by using it as a standard to measure your performance, it forces you to give your attention to what you are doing right and wrong, so you can make disciplined changes as you progress.
Promise to accomplish your goal
“The key is promising to do something and then on a daily basis doing what you need to realize that result” – Ari Kiev
Once you have set your goal, tell the world.
Take the time to work out what you need to do to hit your target, and then get out the megaphone.
Make yourself accountable to everyone willing to listen. Promising your results makes it that much more likely you will push forward in completing the day to day tasks you need to execute to achieve your goals.
While sometimes it is easy to skip a beat, when it is only you who is going to know about the misstep, it is much harder to let others who are holding you accountable down.
Good goals are accompanied by a definitive plan of action, and a way for you to be held accountable to completing the necessary actions.
This is the second post in our “significant importance” series, where we focus on those high value activities that traders tend to neglect.
You can view the first post here.
Now it’s your turn to take action and create beautifully crafted and meaningful goals that activate the subconscious and inspire you to reach new levels of trading success.
About the Author
Sam Eder is a currency trader and author of the Definitive Guide to Developing a Winning Forex Trading System and the Advanced Forex Course for Smart Traders (https://fxrenew.com/forex-course/). He is a part owner of Forex Signal Provider www.fxrenew.com (You can get a free trial). If you like Sam’s writing you cansubscribe to his newsletter for free (https://fxrenew.com/newsletter-sign-up).