Do you set GOALS in your trading?

Of course I do. I have a vision!!! I have targets for the short term, as well as for the long term. Perhaps it is unrealistic to expect that we could make a consistent amount of money, month after month after month, and it may be even dangerous to expect that there won’t be drawdown periods when we either don’t do as well as we want or we even lose money. It may be foolish to overexpose yourself to excessive risk for the sake of meeting an artificial quota that you may set for yourself. However, we must have a vision of what we want just the same.

I don't mean that you exit your position when you make 67.5% on your money. They say "let the profit runs", other say "I kicked myself when the stock resumed its rally after I had exit". In my career as a trader I used to boast about being able to exit at just the right time. But trust me, when you take this attitude, you'll never be happy because you'll always think that you exit too soon or too late. I just don't play that game. My goals have little to do with targets in individual trades or monthly returns, but everything to do with my imagination as to what my success will look like. I have to have a goal to know if I am making progress in my game plan, or I need to change course.

I have heard some traders say: “I just want to beat the S&P 500”. If that was my goal I would have to factor in how much would I have gain if I had placed my money in an IRA and progressively bought the SPX or an indexed fund. This would be the standard to beat. Whatever you make in addition to this standard would be your salary. Then you’d have to ask, would you work as you work for that amount of pay? If the answer is no, I suggest that you need to change your profession, or at least the focus of your trading and seek new strategies.

I spent years (2003-2005) searching for a strategy that would help me meet my goals. For a long time, I was not reaching it but I continued to search just the same. In the process, I was not exceeding the S&P 500, but I had a vision of what I wanted. For the long term, I have very specific dreams of traveling with no concern about money, etc, etc. But for the short-term, I had and have goals of very specific amounts that I want to be making on the average per month, a very specific % increase year over year. Even when I was not reaching it, that vision was essential to my success: 1. It kept me going when I was frustrated and failing. 2. It served me as a guide to change course when I was not in the road to my goal.

A goal must be challenging but realistic, even if you don't immediately know how to reach it, you'll be turning on your subconscious mind to pick on clues that show up daily as to what road to proceed. If you are not making money in your trading, your goal may be exceed the S&P 500, to a level that justifies your working hours. In other words, your gains, minus the gains in the S&P 500 must be higher than the salary you may obtain while gainfully employed. Then, you should set yourself to work on finding the strategies that would accomplish that, but also that allow you to sleep well at night. In other words, you must search for a low risk, high reward strategy that can work well under any market conditions. That alone is a tall order. My point is, your goal is your guidance system, and if you are not reaching it, I suggest that you must keep on the search for that system that accomplishes your goals, and fits your personality. If you are tense, preoccupied with what the markets are doing, if you get butterflies in your stomach when things are not going your way, I suggest your body is telling you that you are in the wrong direction. Set another course, or perhaps keep on doing what you are doing, while exploring other approaches.

Your vision of yourself as a success will keep you motivated to stay in the game, and your short-term goal will guide you to either perfect what you are currently doing, or change directions. I stumbled upon my strategy of entering PCCRC after earnings that has proven so successful, almost by accident. I already had other strategies (high fliers, volatility skew) already in place. Last year, I made 30% on my money using the two former strategies, but this year, I have exceeded my own expectations by reaching over 70%, and the year has not yet concluded! I already have experimented with stocks with buyout rumors (i.e. DISH). This is a perfect support to H.D. Thoreau’s words (see below).

So, yes, set your goals. Use them as your guide, and don’t give up because when you least expected, your vision will become a reality. Be sure to share you success with others either by freely sharing your knowledge or by helping those that cannot help themselves. A wave of goodwill will spread through the world and you too will share in the abundance that everyone is entitled to. If you want to be successful, you MUST pay it forward!

Juan Sarmiento



We become what we think about. And when we're possessed by an exciting goal, we reach it. That's why it's been said, "Be choosy, therefore, of what you set your heart upon. For if you want it strongly enough, you'll get it."
— Earl Nightingale and Anonymous.

http://www.nightingale.com/AE_Article~i~181~article~Success_aworthydestination.aspx


I have learned, that if one advances confidently in the direction of his
dreams, and endeavors to live the life he has imagined, he will meet with a success unexpected in common hours.
Henry David Thoreau