There can be no denying that people who set goals in their personal and professional life are overwhelmingly more successful in both. It is that commitment to a set goal that makes it more achievable. In fact, studies have shown that at least 67% of business people who are successful in their field physically write their goals down. Goal setting help traders to get really focused, and constantly keep moving forward.
Goals are important! Not only do they represent expectations and aspirations, goals also serve as a bridge from reality to the ideal. The moment you set a goal, you face reality by acknowledging the need to address your shortcomings or maybe simply fulfill your desire to do better. By putting in a substantial amount of effort that consequently leads to progress, goals keep you grounded when you see that it’s the little things that can make a big difference in the long run.
Proper goal-setting is not as easy as it sounds. Some traders often become too preoccupied with their desired outcomes, such as making a truckload of pips or bouncing back from their losses, that they overlook the realistic aspect of these goals. You have to think about whether your goals are achievable depending on your trading plan, your risk management, and even your own personality.
One of the biggest challenges for retail traders is that there is nobody there holding their hand and keeping an eye on everything they do. How much risk they take, following their entry and exit signals, taking profits etc. This is one of the main reasons most traders fail when they are trading for themselves. Successful trading requires constant improvement and if you aren’t goal setting you aren’t goal getting!
In trading, you are almost guaranteed to experience runs of consecutive losses from time to time. Risking a small amount per trade, and setting a maximum acceptable loss percentage can ultimately limit the harmful effects of drawdown periods – helping you preserve your capital. To new traders, these concepts may seem foreign, but they are absolutely essential to long-term profitability. By using proper money management, including realistic daily, weekly and monthly profit goals and cutoffs, you are ultimately reducing your risk.