October 25, 2017
Goal Setting for Success | Trading Psychology
“What’s the most important factor of being a successful trader?”
This might be the hardest possible question to answer, but I’ll give it my best shot.
Obviously, you need a strategy that provides a statistical edge over the opposite side of the market… as well as the mindset that enables you to follow the rules of the strategy.
But outside of the strategy itself… I think what most people miss is that you need to improve yourself to the point where you can actually handle the success.
We’ve all heard stories about the lottery winners who go bankrupt, right?
Or how difficult it is for a family business to stay open for more than two generations…
It’s simple… for you to earn $100k, $1M, $10M per year, you need to be a person who has the skills to MAKE it, and the skills to KEEP it.
Money is a funny thing… if you don’t really earn it, you probably won’t be able to keep it very long…. The old saying comes to mind, “easy come, easy go.”
So, the most important aspect of success is becoming someone who can actually handle the success.
In other words, you need to improve yourself, before you’ll ever achieve the success you’ve been dreaming about.
And the most effective way to improve yourself is with goal setting.
I know, this sounds cliché, and it might be, but it really works.
My best advice would be to start using specific goals to make the changes you want to see, so you can become the person you want to be, so you can earn the income you want to earn.
I want to be very honest with you on this… human beings were designed to be great at many things… but trading is NOT one of them.
We make systematic mistakes in judgement, especially when there is money at risk.
We have a hard time following simple rules consistently for more than a few minutes at a time without distraction, and we constantly make impulse decisions based on emotions.
So… if we want to be successful traders, we need to change two things…
First, we need to change our personality to fit being a trader.
Second, we need to develop new skills for day trading.
I won’t go into the specific details of what those changes will be, but here’s a good roadmap for what worked for me.
First, write down everything you want to change about your personality, and your skills.
Be as critical as possible, don’t hold anything back, hold yourself accountable, or ask someone to be your accountability partner.
An example of a personality problem would be… when I was a young trader, I had a horrible habit of letting my temper get the best of me.
It affected everything around me, especially my trading, and I knew that I had to make a change or it would kill my career.
I was one of those guys who would throw a keyboard across the room after a losing trade… I hated that part of my personality, and I needed to solve it.
As it turns out, it wasn’t actually my temper that was the issue… I was over-working myself with too many hours at the desk, and that lack of rest boiled over into my personality.
For me, that was one of my first things I wanted to change about my personality, and that should give you a good idea of where you can start as well.
When it comes to developing skills…
When I was learning to trade, I didn’t know how to read a chart correctly. I knew how to look at indicators, but I didn’t know how to actually see the candlesticks instead of the indicators, does that makes sense?
One of my first problems was that I didn’t truly understand how the price-action on the chart actually worked. I needed to change that.
So… recap…
Step one is to write down everything you want to change. Should be pretty easy if you’re anything like me, haha.
Now, step two is to take that list and set specific goals to solve those problems.
The key is to make your goals specific, so you know when you’ve achieved them.
One of the biggest mistakes I made early in my career was setting a goal like… “I want to make a lot of money, or I want to make $10,000.”
That goal is nice, but it’s not specific enough. The goal is what it TAKES to earn that money, not the money itself. Make sense?
So For my personality changes, my goal was to invest time away from the computer, getting enough sleep, not drinking so much darn coffee, spending time with my wife, etc.
To build my trading skills, my goal was to finish each day with a firm understanding of why the market moved the way it did.
Another goal was to save a copy of each chart, and review them at the end of each week.
Step 3…
You know the problems you want to fix, you set some VERY specific goals…
Now step three is to create routine that will make those goals happen without you having to really think about them.
Think about it this way… how can you create a routine, which will build a habit, in which the results will be to achieve your goal?
If your goal is to spend 1 hour a day reviewing your trades, then you need to clear 90 minutes of free time in your daily routine to make sure you have that time available, no matter what happens during the day.
Be careful with the habits you create because they are going to be hard to break. We can create productive habits, or destructive habits, so choose wisely when you create your new routine. Spend your time wisely.
Step 4…
You know the problems, you have the goals, you’ve created a routine…
Now tell someone who you would be embarrassed to disappoint.
Social pressure is more powerful than gravity. People hate to look foolish in front of people they respect or admire.
One thing you must do is find someone who can hold you accountable, and report back to them at least once a week.
And don’t be afraid to bribe them with whatever it takes… think of this person like a hired consultant to help you achieve these goals. It’s non-negotiable, and it will work extremely well.
Now, the hardest part… step 5… You have to believe you can do this.
Remember that guy like one hundred years ago who broke the four-minute mile?
Nobody thought it could be done… until he did it… then EVERYONE started running a mile in less than 4-minutes.
That’s what you need… someone to look up to, who has already done this before, so you can actually SEE that it can be done.
The final step is to believe, and to do that, you need to find a mentor for both your trading strategy, and your mindset.
Most of the time, these are two different people, but you might get lucky and find someone on a Youtube video that could help you with both.
Your job is to find that person, hang on for dear life, and never let go until you’re successful in the wake of their success.
Ok, we’ve covered a lot in this video… let’s recap.
The single most important factor of being successful is to develop the skills and personality needed to be successful and KEEP the success.
To do that, you need to make changes.
Changes are HARD for human beings, and the most effect way to make change is through “goal setting”
There are five steps to setting goals:
1. Write down the problems you want to fix
2. Set specific goals that will fix those problems
3. Create a daily, weekly, and monthly routine, to create a habit
4. Tell a Friend You Respect
5. Believe in Yourself, by modeling your actions
I hope today’s lesson helps you reach the goals you’re dreaming about, and remember you can always post comments below the video if you need any help along the way.
And remember, I’m always looking for new ideas for these videos, so don’t me a comment below the video and I will cover that topic in my next video!
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