Setting targets is strongly correlated to success. Before you start risking capital, make sure you know how to set Forex trading goals.
Establishing goals is a crucial part of achieving anything. The goals you set become the roadmap to reaching your ambitions. A common mistake that new traders make when setting their first Forex trading goals is quite simply to confuse goals with desires.
Defining your trading goals is essential. Lots of consideration should be given towards establishing goals you can and will achieve. Hopefully, this blog will offer inspiration on how to set Forex trading goals that are specific, measurable, realistic and ultimately support your path to success.
How Not to Set Forex Trading Goals
Before advising you on how to set Forex trading goals, it might be easier to mention how not to do it. The following forex trading goals are inadequate:
Unrealistic: “I want to turn $500 into a million dollars by the end of the year and retire.”
Vague: “I want to make forex trading my full-time job and set my own hours.”
Unmeasurable: “I want to make lots of money and be successful at trading forex.”
None of the above statements is a goal per se. They could be better described as ambitions. While it’s essential to have a bigger picture in mind, that alone is not enough to get there.
Any of these ambitions can be enhanced by adding specific objectives or milestones that narrow down the steps needed to reach these ultimate aspirations.
Good Examples of Forex Trading Goals
As mentioned, you should set your sights on something specific, so you know when you reach that point. A lot of people think you can have just one goal and focus exclusively on it. In reality, you can be working towards multiple targets simultaneously.
Here are some excellent examples of Forex trading goals:
“I will only place three trades per day and stop trading immediately after my third trade is closed.” This goal encourages you to consider the trades you are going to make.
“After each unprofitable trade I close, I will take the dog for a walk or make a cup of tea.” This goal helps you to clear your head, reflect on what may have gone wrong and prevents you from revenge trading.
“If I have made 5% on my account in a day, I will stop trading until tomorrow.” This goal encourages you to finish your trading session on a high note and feel good about your success.
“I will not modify my take profit or stop loss after my opening order is filled.” This goal restricts you from second-guessing yourself and listening to the voices in your head that you were wrong, and this trade is doomed.
You may notice that all of these goals are quite mundane. While true, they are also highly actionable, achievable and closely related to following a consistent trading strategy and best practices.
These are good examples of Forex trading goals as they aim to prevent you from making some of the most notorious mistakes in forex trading.
How to Set your Own Forex Trading Goals
Your trading goals need to be specific to you. Ideally, your goals will focus on certain areas that you struggle with and want to correct or areas you feel you excel at and want to develop further.
Do you want to focus on controlling your behaviour, following your risk management parameters, increasing your knowledge or otherwise? To effectively set your goals, much soul searching is required to uncover your strengths and weaknesses.
Your goals will also depend on your personal circumstances, such as how much time do you have to allocate to your trading endeavours, how much capital can you afford to risk and how committed you are to the idea of developing yourself into a successful go-getting forex trader.
Some traders are so committed that they will get a job working for a forex broker to reach their goal of learning how the market functions and the industry operates. If you are a doctor or lawyer, you probably won’t find it reasonable to take such a drastic life decision to aid your quest of uncovering the secrets of the forex industry.
When you set goals, they should be framed positively. For example, instead of stating a goal as “don’t lose money and fail on more than three trades a day” it could be expressed as “when I am not successful, try not to allow it to happen more than three times a day.”
How to Evaluate your Goals
To help you identify any flaws or areas that can be improved in your trading strategy, you should be keeping a detailed journal. A journal isn’t just your trading history. You should keep a diary where you not only pinpoint which indicators, timeframes and other tools you were using but also how you felt at the time, what influenced you to make certain decisions and how you think you could have improved on the final result.
A well-documented journal can be a valuable asset for setting and evaluating your Forex trading goals. To prevent stagnation or to go off course, you should review your goals periodically, depending on how often you trade. If you trade every day, weekly evaluations would be reasonable. Or if you trade a few hours a week, then monthly assessments might make more sense. It’s good to challenge yourself but don’t overreach and exhaust yourself or set yourself up for failure.
Achieving goals should make you feel good about yourself. The road to success is long and bumpy. If you don’t enjoy the journey, then you may sadly give up. If you make your forex trading goals too easy, you won’t get a sense of gratification for reaching them. Likewise, if you make your goals too hard to meet, you’ll start to lose hope and feel inadequate.
Most important of all is learning valuable lessons that will support your trading career or hobby.
Disclaimer:
Any advice included in this website or correspondence is general advice only and is based solely on consideration of the investment or trading merits of the financial products alone, without taking into account the investment objectives, financial situation or particular needs (i.e. financial circumstances) of any particular person. Before making an investment or trading decision based on the advice, the recipient should carefully consider the appropriateness of the advice in light of their financial circumstances and should carefully review the PDS of the relevant financial product as provided by your investment broker.