How important is achieving your financial goals to your investing or trading activities? Should your goals be strictly a percentage profit target? Where do you start?
You’ve heard the catchy comments about goal-setting;
- “If you don’t know where you’re going, how will you know when you’ve arrived?”
- “A goal without a plan is just a wish.”
- “What is not started today is never finished tomorrow.”
- “If you can find a path with no obstacles, it probably doesn’t lead anywhere.”
- “Success is not final, failure is not final; it is the courage to continue that counts.”
- “You are never too old to set another goal or to dream a new dream.”
- “Set your goals high, and don’t stop till you get there.”
When serious investors approach goal-setting they often set a profit target to the exclusion of all else. This is not only short-sighted, but a dangerous attitude with which to tackle the task. There are other specific and measurable activities that lead toward the ultimate goal of making money. Many who have walked this path before us have identified them and written their goals accordingly.
Here I offer some general activities that work well within goals.
- Recognize high probability set-ups
- Establish evidence-based triggers as “calls to action” to close positions or adjust them to take advantage of the evidence presented
- Use a written trade journal with each position as a strict guide to follow between position entry and exit
- Establish a “max loss” per trade as a fail-safe measure to keep losses reasonable
- Follow key metrics to gauge the market’s overall health or weakness
- Cultivate a WL (watch list) that is within your focus capacity, updating it with a frequency that is manageable and within your diversity goals
- Establish appropriate position sizes that fit your risk tolerance
- Manage your RISK
My favorite notable quote is: “Manage your risk! The profits will take care of themselves!”
Let’s make it happen!
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