We’re at the end of the year 2013, about to enter the new year, 2014. Have you evaluated your trading strategies from this year? Have you found mistakes
and accomplishments? What’s your trading objective for the coming year? How do you set your goals?
When I entered my education on options behavior I was pleased to learn the structure of goal-setting. It is identical to the organization of goal-setting
that I had learned in my job with a Fortune 500 company. The process name is S.M.A.R.T., a mnemonic, giving criteria to the setting of objectives. The
letters conform to the words specific, measurable, attainable, relevant and time-bound. If I take time to set my annual goal according to these letters,
and refer to the written goal during the year, I can follow my trading efforts toward the goal.
Let’s break down the word SMART and see what it would take to structure the trading goal.
S = Specific
What do I want to accomplish? What are the benefits of accomplishing the goal? Who is involved? What is the location? Are there any requirements and
constraints?
Example: I will increase my portfolio balance by 15% in 2014. I will repeat successful investment styles more frequently than those that are unsuccessful.
I’ll depend on my education on Options’ Behavior to accomplish this. I must know and implement the discipline of the 6-Steps I learned.
M = Measurable
How much? How many? How will I know when it is accomplished? Are the indicators known? How often will I make the effort to measure my activities?
Example: I will log in all my trades and their results. I will identify the reasons for accomplishment or obstacles that prevented accomplishment each
month.
A = Attainable
What is the trading style that is in line with my reward/risk ratio. Do I follow my strategies to accomplish this R/R?
Example: I did not carry a stop-loss on my long-stock-only holdings when a document was released with bad accusations about the company. The stock price
dropped more than fifty percent within one hour. That lesson taught me to carry stop-loss orders on such positions.
R = Relevant
Is this worthwhile? Am I the right person? Does this match my other needs/efforts? Is it applicable in the current economic environment?
Example: My trading life has taught me that tracking the math associated with the adjustment process is critical to my success. When a market correction
begins to build, my portfolio takes a financial hit, “telling me” that I should be prepared to insert an element that would offset any financial harm.
Which application would be the best choice? Selecting opposite options per individual equities or applying a beta weighting against the Nasdaq?
T = Time Bound
What can I do today to prepare myself for this goal? Providing myself with a time frame is important in my accomplishment of the trading goal. A
personal commitment to a deadline helps me focus on my efforts on or before the due date. The time-bound goal is intended to establish a sense of urgency.
Example: Where should I be in one quarter? Can I track this goal each month to determine if I’m on the correct path or if it needs adjustment?
Spending the time identifying these steps helps me to see the importance of Goal-Setting for my trading life. As long as you are considering your own
trading and investing, this should help you, too!
Emilu Bailes
OptionsANIMAL Instructor
Options Trading Resources
practice options trading * trading system * learn option trading * options trading classes * live investing workshops * options trading classes * online investing curriculum
