Today we are going to discuss what are realistic goals for a forex trader, but we are going to look at this from a slightly different perspective.
One of the things that most often trips up new traders is setting unrealistic goals. Most people start trading with an idea in their heads of exactly how much money they want to earn per month. When they don’t make that amount in their first few months, even their first year, they can get extremely disappointed. But what you make per month will always fluctuate and will always be relative to the size of your trading account.
What we want you to appreciate here is that everything is relative and the key is slow, gradual but solid progression and improvement. Sudden leaps in profit are not indicative of progress… those are just anomalies, often down to good trading practices plus a big dose of luck! So let’s look at a better way of measuring your success, a way of making realistic and progress-based goals instead of monetary goals.
A Realistic and Relative Scale
Imagine yourself as the most successful trader you can be, making everything you need, financially, every month. Say that this position would give you a score of +10. That’s your top score. Now imagine yourself making some money and losing some money, and breaking even every month. This is a score of 0. Finally, imagine yourself losing all your money and blowing your account every month, eventually going bankrupt. This would be a –10.
So now you have a scale, from –10 through 0 to +10. Now think of a month where you have some profitable trades and some losing ones, but you end up making some money. You would give yourself a +2 or +3 that month. Conversely, imagine a month where you make quite a few losing trades, alongside your more profitable ones. You might score yourself a –2 on that month.
From Zero to Hero… But Not Overnight
A good way of setting realistic goals in trading is to score yourself at the end of every month depending on how well you do that month, then set yourself the goal of improving the following month. But keep it realistic. Most people who are at, say, a +1, if you ask them where they want to be next month they say they want to be at +10, but this is unrealistic. As with any discipline, you can’t go from zero to 10 in one go. So if you’re at a +2, make it your goal to get to a +3, i.e. to make a little extra profit the following month. Many people struggle at a –2 or –3 and crave being at +10, but a realistic goal is to get themselves to a +1. It might not sound very appealing to aim for a +1, but you must remember it is positive growth. The other benefit is that your confidence will grow. And confidence is critical to doing well in trading.
Slowly and steadily you will move towards a +10, which is when you start making the money you want to make consistently.
Personalize and Invest in Training
This type of goal setting works well for two reasons.
1) You can personalize the system for your financial level. For some people, an extra £300 a month is very significant, for others, only an extra £3000 is significant. What you make is also always dependent on the size of your trading account. But getting from a +3 to a +4 is an absolute measure that can be applied to anyone, at any financial level, with any sized trading account.
2) This scale allows you to view trading like any other discipline. You always have to make slow and steady progress to achieve something. If you decide you want to run a marathon, you can’t go out next week and run 26.2 miles without doing any training, you have to start by running a short distance and then build your distance slowly each week. Similarly, if you decide you want to be a heart surgeon, you’re not going to operate on someone the following week, you are going to spend years in medical school, eventually specializing in surgery and then, many years of training later, perform your first heart surgery. You must invest in training yourself if you want to succeed in anything.