The actions of men are the best interpreters of their thoughts.
– John Locke
When you’re a full-time trader, you have to perform, as that is what pays the bills and the life that you want to have.
So the pressure is on. But if you keep the pressure on non-stop and expect perfection from your performance with absolutes you are setting yourself up to fail.
It is only with realistic goals that you will take yourself to a greater level of success.
Unrealistic Daily Earning Expectations
Frequently you will hear a trader state how they absolutely have to earn a set amount of money per day in order to meet their financial obligations. They take an annual figure that they have decided they have to have and then divide it into a daily quantity without any thought for the fact that the markets don’t work in such a linear fashion.
All the daily target does is make you feel that you must trade every single day no matter what the market conditions are or if there is an opportunity that meets your criteria and strategy. This is a dangerous practice if followed through – equally as bad psychologically if you keep hold of the fact that you need to stick to plan.
The former means you start wandering off into uncharted territories or taking a ‘punt’. The latter means that if you don’t trade on a given day then the next day you see that you have to earn double the amount to make up for the missed day. Again, you are setting yourself up to potential failure as you will be distracted by the need to do double the earnings, especially when the markets may also not be in a position to deliver such things.
So the pressure builds, the focus becomes the need to trade anything to get any profit and the goals become more and more unrealistic.
Not a good place to be and is where realism will help turn the situation around.
A Healthier Way To Set Trading Goals
Whilst goals that include a desired daily return is a good incentive, ideally, they should be expressed more in percentage terms not be made into an absolute. It has been proven by the research psychologists that it is only by setting realistic goals that they become a driver to success.
In general, the recommendation from those who have been around for a while is to set an annual target but take each day at a time. Returns come in different amounts and in different time frames and certainly not the expected linear daily amount like employment.
The trick is to sit patiently and be ready to act when the markets present opportunities. This is the acceptance that the markets are in control and if you try to impose your will, it only leads to a poor outcome and greater stress, which in itself degrades performance.
It may not be that you get what you need every day – indeed you may not get anything for many days – but setting realistic goals for the year is what will ensure that you can get ahead in the long run.