Why Sould You Set Trading Goals?

admin — Wed, 28 Apr 2010 05:33:35 +0000

Successful traders and investors set high goals and make specific plans to achieve them. Goals can be motivating, and they don’t have to be just about gaining monetary wealth. The more distinct the goal you set, the better. Abstract goals often seem impossible to achieve and are weak motivators. Although dreamers can succeed, nothing much happens until they take the actions necessary to make the dream come true.

By breaking down a larger goal into specific steps, or sub-goals, you will be more likely to achieve the goal. Rather than a misty, undefined fantasy, specific immediate goals help you to see how even a seemingly unattainable larger goal can be realized.

When you see the specific details, you will be more able to develop plans for achieving your longterm goals. When specific goals help you see how your broader goals can be achieved, they can be highly motivating. But goal setting isn’t straightforward when it comes to trading. Setting a goal to become a “winning trader” without a specific set of sub-goals, such as planning to learn specific trading strategies or planning to practice executing trades in a variety of market conditions over time, is simply not sufficient.

It is also possible to set a goal that is too specific. It can be so specific that it interferes with your ability to trade or invest. For example, trying to attain a particular profit each day can actually be self-defeating.

One disadvantage is that trying to achieve a specific dollar amount might cause you to make poor, impulsive decisions, due to putting too much pressure on yourself. In the end it may cause you to possibly overtrade.

The pressure of this overly specific goals may cause you to take poor trading setups or make poor trading moves because you feel a sense of urgency to reach a specific dollar goal. Such an approach usually fails. When you take poor setups, you often end up losing money. In addition, a daily or weekly dollar goal tends to make you think that you should trade every day, or all day long, regardless of whether or not the market has opportunities, or regardless of whether or not you are in an optimal mental or emotional condition.

It is often wise to let the market tell you how much it is willing to give you on a particular day or week. You can’t always dictate how much you can make. It’s also wise to stand aside when you see conflicting market information or when you are in poor spirits. By setting a specific amount to make, though, you’ll tend to feel guilty about staying out of the market when you are either in poor spirits or when the market is just not conducive to profitable trading or investing.

We are in just such a time now. For instance, currently, there are many bargains to be had among great global enterprises. But it may be too early to jump in. Prices may slide quite a bit more before we see the market bottom. But a goal that is too specific can cause you to jump into the market much too soon, and consequently have to suffer a huge drawdown before the actual market bottom is obvious on the charts.

It is a paradox, but when you focus on outcomes, you will have trouble reaching them. When you focus on the process of trading or making sound investments, and act as if you just don’t care what happens, you’ll end up making more profits. Rather than focus on dollars, focus on whether you follow your trading or investing plan. Look at how many justified wins you achieve, rather than at the money you make. If you trade consistently and according to plan, you’ll end up profitable (assuming you use sound trading and investing methods).

In addition, you will feel more carefree and detached from the outcomes. When you focus on specific money amounts, you’ll tend to think of the money in concrete terms; you’ll think of what you can buy with the money, rather than think of it as just abstract points or ticks that you work with.

Goals can be motivating when used in the proper way. It may be nice to occasionally look at how much money you are making, such as once a month. If you focus on it too much, however, it can be a disadvantage. You will put extreme pressure on yourself to perform. You may feel great when you have big wins, but discouraged when you face losing trades. It’s better for your emotions to keep things as objective as possible, and that usually means focusing on the process of trading consistently and decisively. The more you can focus on the process, the more profitably you’ll trade in the long term.

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Learn the Fundamentals of Stocks and Shares

admin — Thu, 15 Apr 2010 13:08:13 +0000

Each one who desires to be in industrial enterprise should gain some knowledge on the introduction of stocks and shares. This is the fundamental fact you have to learn when getting onto the business. Why take the risk if you don’t know anything about it right? In deciding about businesses, a person’s knowledge and ability is a must. The correct introduction to trading stocks can help you reach your goal. To the newbie, it is like a seemingly difficult puzzle to solve, but to the experts, it is just another day of game play.

Let us take for example the stock options during chapter 11 bankruptcy. Chapter 11 is a restructuring plan for bankrupt businesses. An option for chapter 11 bankruptcy allows continuous while restructuring is on the process. Information are taught on the introduction to stocks and shares so you will be informed of the good and the not so good things about it.

The US bankruptcy law has chapter 7 and chapter 13 as well. Both are very important to explore and scrutinize if you are really eyeing to be in the business world. In chapter 7, the accounts are settled. Assets should be sold and the gathered will be use to pay the creditors and if something is left will go to the owner. A more reasonable option is chapter 13, because it cost less and has better terms. Understanding these aspects would definitely helpful.

Basic knowledge with trading stocks can make things work for you. Are you capable of understanding complex business matter? If you review it carefully, you will understand that company owners will have less values on their share rather than the creditors. It is still up to the individual or company to choose investing in stocks in chapter 11, or to choose some other methods.

It is important that when you get into any kind of business and when you face each aspect that you are armed with the problem knowledge. Be open-minded and never hesitate to try to learn some important business information. Your business depends always in your hands.

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