Specialty Skills

Goals Are Essential to Becoming a Consistent Winner

Dr. Woody Johnson

Monica couldn’t believe it. “What went wrong?” she sputtered. Everything seemed to be lined up. The price action had taken off in a Maribuzo green candle. “It looked so good,” she thought. Monica sat staring into space as she recounted how she had lost much more money than she had originally risked. It all started with the 240 minute chart on the YM E-mini.  It was chugging along when something … an economic report perhaps … had caused the price action to surge.   She felt her heart throb like the pistons on an old Pontiac GT as she pulled up the 15 minute chart.  It looked even better.  She really didn’t have a set-up, but it occurred to her that if it’s moving this fast she should jump on board.  After all, wasn’t the news driving it?  The thoughts seemed to whirl in her head and she lost track of some of the most fundamental lessons that she had learned regarding novices and extended rallies.  She placed a market order to go long and almost immediately the price action hit a substantial supply zone and pulled back.  Monica felt powerless as she moved her stop three times and finally after she couldn’t take it anymore she exited the trade with a huge loss.  It was only after she had tallied her results that she then remembered about the dangers of what she had just done.  She also remembered that she had promised herself she would set goals around trading with only high probability trades where she had calculated her odds.  She then realized with crystal clarity that having those goals written down would have been a big help; and quite likely might have saved her a lot of money.  She just got an expensive lesson about the importance of goal setting.

Most traders are familiar with the power of goals.  But, then again, are they?  Goals have been written about in more books than can be counted.  With all these missives on goals, why is it that they are so over-talked about and under used?  Let’s begin with some definitions of the word goal:  a goal is an aim, a target, an objective; the end to which a design tends, or which a person aims to reach or attain (Webster’s Dictionary).   So, essentially, a goal is where you want to end up in any particular endeavor.  It is the result that you seek and the outcome that you desire.  In this regard, some think that goals are only to be identified when you want something “important” or “large” like trading.  However, setting and reaching goals is a skill, and like anything else that requires skill you’ve got to practice them.  Not to mention, consistent targeting and hitting of small goals is like taking consistent small steps … if you keep going you’ll reach any destination – even around the world.  Herein lies the argument for having goals for everything.  This would necessarily mean goals for eating, exercising, sleeping, conversing, selling, working, and of course trading.

Now, many readers may have a somewhat negative reaction to having so many goals; but if you take a look at people who are most productive and happy, they will tell you that they live their life by design…not by default.  What does that mean?  It means that you are self-aware of your thoughts, emotions and actions.  This does not mean that you are self-absorbed –  an ego function that is about self-puffery and conceit.  Self-aware and living by design means that you are intentional about the results and the outcomes in your trading and your life.  Living and therefore trading by design also means that you remain focused on what matters most in what you are doing and why you are doing it – and that includes the seeming mundane.  Living and trading by default means that you are governed by the old programmed patterns (most of which are not only negative but out of your awareness; and you are “reacting” in knee jerk behaviors rather than “responding” with thoughtful action.  As Stephen Covey writes in “7 Habits of Highly Effective People” begin with the end in mind.  That refers to whatever you’re doing.  In other words, if it’s important enough to do, it’s important enough to do it in intentional awareness.  So, Monica would have done herself a big favor if she had been careful to construct her goals and let them dictate her behavior.

How you construct goals is also of critical importance.  Here are some power point guidelines:

  1.  You’ll want to write them down as a place to start.  In this way you will articulate them in a focused fashion.  Writing involves the physical/kinesthetic use of pen and paper along with seeing it and reading it; your brain has a more powerful and supportive relationship to the sight of it written out.  In addition, you are giving your subconscious instructions every time you read it.
  2. It’s important to identify goals that you “want” not goals that you “don’t want.”  For example, “I’m so grateful now that I joyfully choose to trade only 5 trades per day I will know this has happened every time I stop when I have achieved this number.” Not, “I don’t want to over-trade.”  In this way you are moving toward what you want rather than away from what you don’t want.
  3. You’ll want to be positive in how you construct your goals.  It’s important to use only affirmative words; avoid using words like not, never, don’t, etc.
  4. Be grateful in the expectation of achieving your goals as in the example above.
  5. Use emotionally charged adjectives to express your goals.  (see number 2 above) This will emotionally intensify the goal like plugging it into a wall socket for energy.
  6. Be specific as possible, your mind likes details and it is especially powerful to your planning process to have your goal particulars acknowledged.
  7. The goal works best when it is tied to a purpose or a compelling reason for why you want it.  The purpose adds its own energy to the process and can catapult you into achieving it.
  8. You’ll want it to be measurable so that you will know when you have achieved it; and for aiming purposes; the feedback of hitting the mark is empowering. (see number 2 above)
  9. The goal must be achievable.  It doesn’t help you to have a monetary goal of $1,000,000 in 2 weeks when your capital is only $25,000.
  10. It’s important that the goal is results oriented as well.  For instance, “I am go grateful now that I have joyously chosen to go from simulation trading into live trading when I have reached 3 consecutive months of 50% hit rates of my strategies.”
  11. Having time bound goals is also a power point.  (see number 10 above)  Putting a realistic time frame really helps the subconscious accept that this is a matter-of-fact endeavor.

Then there are those who believe in setting goals, they just don’t follow-through.    This is fraught with pitfalls because although it’s a good thing that you have taken the time to articulate an identified aim or target; unfortunately you are reinforcing the lack of follow-through, which makes it all too easy to continue with this lack of taking action.  However, if you tether your goals to what you truly desire and follow the guidelines above you will be astonished at how powerful goal setting can be.

Mastering your mental game is an everyday exercise, not just for trading.  The interesting thing is that your mind/brain is like a muscle and if you continually train it you will not only create consistency for follow-through and focus, but you will develop greater capacity for strength and endurance when you are met with trading or life challenges.  Goals are essential to getting on and remaining on the pathway to trading success and to keeping the A-Game in your sights all the time.  In that way when you really need it, it will be available…in spades.

Happy Trading.

This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author expresses personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. Reprints allowed for private reading only, for all else, please obtain permission.