Why Setting Trading And Investing Goals Can Improve Your Trading/Investing Performance
Written by Sam McNeill   
Friday, 27 November 2009 08:48
"Is there a particularly good way to set your trading and investment goals?" For trading and indeed for all areas of your life, there are two crucial elements in goal setting and attainment. First the perceived difficulty of the goal and secondly how specifically you state the goal. These two elements will play a large part in determining whether you will achieve the goal.
by SamMcNeill


"Is there a particularly good way to set your trading and investment goals?" For trading and indeed for all areas of your life, there are two crucial elements in goal setting and attainment. First the perceived difficulty of the goal and secondly how specifically you state the goal. These two elements will play a large part in determining whether you will achieve the goal.

If you set yourself a trading/investing goal which is difficult and specific you are more likely to heighten your performance to attain your goal.

In a trading example a goal to earn $50,000 next year through your trading activity is good. However, a goal to achieve, say $51,600 will likely produce better performance as it is perceived by your brain as more specific.

Setting easy goals is unlikely to raise your performance as if you set a difficult but specific goal. So if you believed that a trading goal to earn $51,600 is easily attainable for the year, and then maybe set it to a more challenging $72,400.

Don't be unrealistic though, as you are more likely to perform if you believe you can achieve your goal. Base your goal on your knowledge, training, skills and past experiences. If you know it can happen, that you can make it happen, then your performance can increase.

As you work towards achieving your goal, your belief in the importance of achieving your goal will make you more committed to your goal. As you assess your progress you will be reinforcing your commitment when seeing results. This will strengthen your performance to achieving your goal.

A way of measuring your trading progress, can be done as simply as keeping an ongoing running tally of your trading outcomes for the year. For example, if your goal is to earn $72,400 from trading for the year and by half way through the year your trading tally is $38,100 you can measure how well you are placed to achieving your goal - you have more than half of your goal achieved.

Often when we start off in trading/investing we do not set goals. Often we're just happy to see ourselves make some money. This unfortunately is not specific or difficult - it is not going to challenge or focus your performance.

Think about your trading goals. Set yourself some specific, difficult and measurable trading goals and understand why you want to achieve them. Then start measuring your progress.

In his excellent text book "The Psychology of Persuasion", Kevin Hogan talks about "the least acceptable result". What is your LEAST ACCEPTABLE RESULT from your trading? Think about this very carefully because this is the true goal that most people WILL achieve from any activity. You must move your Least Acceptable Result up to the level of your goal.

About the Author:

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