Becoming a profitable trader is a journey of continuous learning and self-improvement. As you embark on this path, setting strategic goals and guidelines is one of the keys to achieving and maintaining consistency. I most often hear traders only talking about profit when it comes to trading goals. It's important to recognize that proper trading goals extend far beyond mere weekly or monthly profit targets.
While profitability is undoubtedly a crucial aspect of trading, focusing solely on immediate gains can lead to hasty and emotion-driven decisions. Traders that focus exclusively on profit are more willing to break from their process - This is something I have witnessed time and time again when working with developing traders. The strategic goals we will explore in this article encompass a more profound perspective—one that prioritizes long-term growth, risk management, and personal development.
By emphasizing capital preservation, income generation, and account size increase, we aim to instill a disciplined approach to trading. These goals encourage traders to build a strong foundation based on prudent risk management, trade planning, and continuous improvement through daily review. If you want to be a winner, measure more things. Setting trading goals (unrelated to PnL) is a way to measure more aspects of your trading. Plus, it reinforces the process which ultimately leads to improved profitability.
In this article, we will delve into a comprehensive framework encompassing strategic goals, personal approach, routine, strategy, self-improvement, risk management, and execution. By adopting these principles, you can improve your chances of not only achieving financial objectives but also mastering the art of trading in a sustainable way.
Strategic Trading Goals
the Main Strategic trading Goals
1.1 Conserve Capital
Job number one of every trader is to manage risk. The cornerstone of your successful trading journey is capital preservation. You should prioritize protecting your trading capital from unnecessary risks and avoid over-leveraging, which can lead to devastating losses. By adhering to disciplined risk management practices, you can withstand market fluctuations and live to trade another day. As always, no matter what happens in the day-to-day, we need to keep our seat at the table.
1.2 Generate Income
While capital preservation is paramount, generating consistent income is your ultimate objective. To achieve this goal, you must focus on identifying high-probability trading opportunities and developing a reliable trading edge. This involves honing your skills, finding a niche that suits your strengths, and capitalizing on unique insights.
1.3 Increase Account Size
With sound capital preservation and a steady income stream, you can work towards growing your account size over time. This goal demands patience, discipline, and a long-term perspective. By reinvesting profits and compounding gains, you can steadily scale up your trading activities and achieve exponential growth.
secondary trading goals
2.1 Personal Approach
Understanding your strengths and weaknesses is critical in trading. Focus on your areas of expertise, find a niche you excel in, and capitalize on it. It is essential to resist the temptation to trade in areas where you lack a proven edge. The absolute best way to understand what your strengths and weakness are is through a Trading Playbook and Trade Review process.
2.2 Routine
Follow a well-structured routine to maintain focus and consistency. Before each session, develop a trading plan for the day and get your mindset into a calm and neutral place (premarket check-in can be part of your playbook). During active market hours, stay attentive to the markets. After trading, review your performance, analyze trades, and identify areas for improvement.
2.3 Strategy
Having a clear and well-defined trading strategy is paramount. Know what you want to see in the markets, where you expect to see it, and when to execute your trades. Additionally, have a detailed plan for managing trades, both when they move in your favor or against you. Remember that if you are not trading a real setup or strategy, then you are most likely gambling.
2.4 Self Improvement
Continuous self-improvement is a key differentiator among successful traders. Keep a detailed trading journal, which serves as a valuable source of insights and lessons. By analyzing your journal, you can identify patterns, strengths, and weaknesses, enabling you to refine your strategies effectively.
2.5 Risk Management
Prudent risk management is the backbone of your successful trading. Use leverage wisely, understand your personal risk tolerance, and establish risk limits for each trade and each day. Scaling up risk during favorable periods and reducing it during challenging times is a strategy that aligns with long-term success. Use a “max loss” threshold or value on the trading day.
2.6 Execution
Trading with discipline and conviction is vital. Avoid impulsive decisions and maintain a patient approach, only executing high-probability trades. Fear and hesitation can be detrimental to your performance, so trade the market, not your profit and loss.
Tracking Trading Goals
All of the previously mentioned goals can be used to improve your trading in a way that is not focused on PnL. Find an area of your trading that you are struggling with or want to improve in, define the goal, decide how you will measure that goal, and start tracking. For example: If you frequently struggle with over-trading, set a rule that you will take a maximum of 3 trades per day, regardless of the outcome. If at the end of the trading day, you took 3 trades or less, you respected your process and new rule - That is a win for the day. By repeatedly doing this with various areas within your trading, you can develop strong trading habits and processes that will serve you over the long run.
Conclusion
Trading goals can help traders navigate markets and their own mindset through rules and process-based approaches. While the goals mentioned were fairly broad, they will apply to most traders. You can refine them (as needed) for your particular scenario. These are the exact process-oriented goals that I personally use in my own trading and with trading clients. Remember that trading is a continuous learning process, when times are tough remember how far you have made it and find more aspects within your trading that you can track. The more “process wins” you can add up, the closer you can get to developing consistent profitability.