Performance and Learning Goals
Stop setting goals. Goals are pure fantasy unless you have a specific plan to achieve them.
Often new and inexperienced traders enter the trading arena thinking that they can begin making big profits right away. I'm going to tell my boss where to go and make my living trading the markets - freedom at last. How often I have heard those words. It takes skill, knowledge, and experience to trade profitably over the long term. Anyone may experience some initial success, and begin to think I love this, it's easy. Often however the success is sporadic and short lived. A seasoned trader hones his/her skills over many years gaining a wealth of experience. If you do too much too soon, odds are you will fail, and become very disappointed. New traders, after experiencing that failure and disappointment, will often give up rather than continue on. If you are new or even relatively new take smaller steps and build up your skills, the failure and the disappointment is your education (just like college), you will soon experience profitability, if you learn from your disappointments.
Psychologists have learned that setting high performance goals, such as trying to make your living from trading when still a novice, are not always the most appropriate goals. If you lack the skills and experience to reach a particular goal you are setting yourself up for failure. You would not try to win a triathlon without proper training, would you? Why make such high trading goals until you have the requisite knowledge and skill? Setting goals to high is certainly understandable, however, ambitious people are taught to set high goals. If you do not even consider achieving an ambitious goal, then you will probably not even try to achieve. It's very important that we set high standards and go out and do whatever it takes to reach them. The important difference is the initial goals must match your skills and experience. If you push yourself before you are ready you may not only fail but you may give up as well.
We need at this point to distinguish between performance and learning goals. It's quite normal when setting goals to think only in terms of performance; that is, we think about specific dollar amount or percentage gain per month, or quarter that we should achieve. If you are new to this game, it is much more useful to think in terms of learning goals instead. A learning goal is more modest and easily achievable. Break down the larger goal into specific steps that are doable and achievable, and rewarding yourself after each step is accomplished. For example, a learning goal may be, "I'm going to read one book about trading the markets every week (month)." This specific goal may not lead you directly to your monetary goal right away, but it is easy to achieve, and the knowledge gained definitely will aid you in developing a plan that will get you to your monetary goal.
So if you're a novice trader, set yourself up to win. Do not set overly high performance goals; set high and realistic learning goals. Break the bigger goal down into specific steps, and reward yourself after you complete each one. When you become a seasoned trader with advanced skills, you can set out to achieve those high performance goals. But right now, it's in your best interest to focus on skill building, rather than high performance.
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