Wednesday, August 24, 2011

Motivation and Goal Setting

What motivates you to be a trader?

Is it to become filthy rich? Is it for the thrill? Is it because you want to do something challenging and exciting? Is it because the girl you like trades currencies and you want to impress her?

Kids on trading forex on a computer

It is important to know what your true motivation is, or whether you should even be trading at all. Traders who aren't serious or committed to the craft will be quickly eliminated by the market.

For example, seeking thrills and seeking consistent profits don't go together. You might enjoy the thrill of putting on a humungous "I'm betting the farm" position, but believe us, you won't be smiling once your trade blows up in your face.

If thrills are what you seek, go to the casino, jump out of a plane or try driving an F1 racing car.
Better yet, if you want a real thrill, drive an F1 racing car out of a plane and land in a casino. Now that's a real thrill! And you might even lose less money than if you were trading.

What have you determined to be your goal(s) for trading?

This can be expressed monetarily using a profit goal (either in currency or percent return) per unit of time. For example, you might choose a goal like making $4,223,834,145.53 per month, or achieving a 529% return every week.

Space Jam Jordans
This doesn't necessarily have anything to do with money. Like "My goal for trading is be able to buy them new Space Jam Jordan 11s so I can impress my lady crush and she can fall in love with me and we can live happily ever after."
Or "My goal is to have enough money to have plastic surgery so that I can look like Halle Berry and have everyone eating out of my hands."
Okay.
We lied.
Everything has to do with money.
Whatever you decide, just make sure it's specific and measurable. Set trading goals that will help you develop as a trader.

It can't be vague like "I want to be rich". Changing it to "I want to be super rich." does not count.
Be specific!
"I want to make 1% every week."
"I want to be winning 50% of the time by the end of this year."
"I want to double my account in six months."
"I don't want to make any trading mistakes for the day."
By making your goals specific and measurable, not only will you know what you really want, but you'll be able to monitor your progress and see whether you are improving or not.

(See more)  Risk Capital
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