When it comes to trading, many First time traders need to jump right in with both feet. Unfortunately, hardly any of these traders are successful; successful trading requires knowledge, skill and expertise.
Before you dive in, you want to ascertain what your objectives are. What do You expect to achieve with your trading activities? Why do you want to exchange?
1.) To Purchase a new sports car?
2.) To purchase a bigger house?
3.) To make $100,000 a year / month / week?
4.) To finance a college education for your children?
5.) To make a fulltime income to Support your whole family?
6.) Freedom to choose what, when, and who you do things with?
7.) To have a fun, exciting life complete of extraordinary experiences?
8.) To work less and enjoy more time With your nearest and dearest?
9.) Or are you planning to make Some excess cash on weekends?
Before you exchange a single penny, actually think about what you expect to Reach with that investment. Knowing what your aim is will help you keep motivated when you are facing a difficult bout of trading, and it is going to help you make smarter investment choices on the way.
But be realistic:
Too often, people start day trading with dreams of getting rich over-night. I am not going to say it is impossible (because it’s possible), but allow me to remind you that it is also quite rare. It’ s much safer to make a trading strategy which will enable your account to grow at a slower rate with time, which may finally be used for retirement or a child’s edu-cation.
So let’s discuss how to define your goals and make a plan for your day trading endeavors.
Here are the 3 important steps:
1.) Establish Your SMART Goal
SMART is an acronym that stands for:
Fortunately, when it comes to day trading, it is very easy to specify a Goal that meets all these criteria. You simply specify just how much money you want to make per month with your day trading.
I Would like to earn $10,000 per month with day trading.
· Is this SPECIFIC? —
Yes, a Dollar amount of $10,000 is extremely specific.
· Is this MEASURABLE? —
Absolutely! Just check the balance of your trading accounts in the Beginning of this month and at the end of the month. Your ac-count equilibrium is the simplest way to gauge the achievement of your objective.
· Is this ATTRACTIVE? —
That depends upon you. $10,000 is definitely attractive for some-one that Currently makes $4,000 per month, but it would not be appealing to someone who’s currently paying $10,000 just in mortgage payments because of his 6,000 square foot home. Be certain YOU are motivated by this goal.
· Is this REALISTIC? —
We spoke about this in the last chapter. Successful people believe That there are no unrealistic goals; just unrealistic time-frames. At the moment, your trading account might not be large enough for you to realistically exchange enough shares or contracts to reach your long-term trading target, but if you follow the actions outlined in this book, it is very possible your long-term goal will end up realistic in the not too distant future.
· Does it have a TIMEFRAME? —
Of course it does: you need to make $10,000 per month; the interval is 30 days.
2.) Make a Plan
Creating a strategy is essential to your success, Many traders look for a trading plan first and then expect that the Trading strategy can help them achieve their targets. That is putting the cart before the horse.
Whatever you are doing, you must first specify What You Would like To accomplish, and then aim how to attain that objective. Otherwise you might learn that you began climbing up the ladder right at the very start.
3.) Execute the Plan
This is where the rubber meets the road. Once you Have your program, you’ll want to really execute it. And naturally, that is where most of us neglect.
Let me give you an example:
Amazon lists 18,361 novels for”Weight Loss” and ano ther 28,707 novels For”Exercising and physical fitness.” That is a total of 47, 068 novels on the popular subject”How to Lose Weight” (compared to onl y 4,463 books in the category”Stock Trading and Investing”).
If I wrote a book on weight loss, It could be a very, very short:
1.) Eat less.
2.) Exercise more.
Come on, it is easy: we all know that we can lose 10 pounds in 10 months If we just stick to those two rules.
We reduce our calorie intake to 1,500 or 2,000 calories per day, and Then we do some aerobic exercises at least three times weekly for at least 30 minutes.
We’ve Got a SMART target (“lose 10 pounds in 10 months”), and we’ve got a strategy (“eat less and exercise more”), so why do we k eep purchasing these magazines and books that promise a new diet, a new method to shed weight?
Since we fail to execute our plan. And then we blame the strategy:”it is too hard,””it is impossible,””it does not work.” This isn’t correct. We did not succeed because w emails were just too lazy, or we did not have the discipline to execute our strategy. But rather than working on the real problem — the implementation — we alter the strategy itself, hoping that there is a simpler way.
Successful individuals will realize that their problem Doesn’t lie in the plan, but in the implementation.
Here’s what you can do so as to ensure your own motivation and Dis-cipline in regards to executing your strategy:
It’s important to concentrate on the big picture. It will h elp you stay Motivated if your learning reaches a plateau, or when you face a few losses. All great accomplishments begin with a excellent vision.
Once you’ve defined your SMART goal and the amount of money you want to Make with trading, ask yourself this:”How would attaining this goal affect your life?” And”how would it af fect you ?”
Take your time to answer these questions and write down the answers.
As you know, human beings are great at procrastination. We do not like to Be out of our comfort zone, and that is why sometimes we do nothing and just”hope” that we’ll achieve our targets. As you can imagine, the odds of achieving a target by doing nothing are slim to none. So, an-swering another question can enable you to do it immediately.
Ask yourself:”Why should you behave NOW?”
When you take the time to actually think about the answer, it will be a Tremendous motivator. Little tricks like this will help you stay focused on your own Long-term goal, which can allow you to execute your strategy.